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It won't be long until you're making your list and checking it twice. To get a jump on your 2025 holiday spending, save money with an account that pays maximum interest to supercharge your spending power. If you start saving early and bank strategically, your savings can grow until the moment you're ready to spend it on the perfect gift.
There are several solid choices for where you can put your money so it will be accessible to you when you are ready to start shopping—and work hard earning interest in the meantime. Here's what you need to know about different options for holiday savings accounts, plus the pros and cons of each.
What Is a Holiday Savings Account?
A holiday savings account can be any savings account that you use to house money for holiday gift-giving, travel and other festivities.
Some banks and credit unions offer a type of account designed specifically to help people save for the holidays throughout the year. These are sometimes called holiday club accounts or Christmas club accounts. That said, it's a great idea to consider all your options before you land on holiday-specific savings accounts. Generally speaking, you'll likely see the most benefit if you pick a savings account based on where you can find the highest rates, plus any other banking features that are priorities for you.
Do I Need a Dedicated Holiday Savings Account?
In general, it's best to keep your holiday savings somewhere separate from other savings, such as your emergency fund. If you accidentally eat into your emergency savings, you could leave yourself without a safety net should a true emergency arise.
The same goes for money earmarked for other milestones, such as a down payment on a house. Otherwise, the giving spirit could end up undoing hard-won progress toward your other financial goals.
That said, if you're happy with your current savings account, you may be able to find other ways to stay organized. Some banks allow you to break your money up into different savings vaults. Labeling each vault allows you to clearly differentiate between money tucked away for different goals.
But if your bank doesn't offer savings vaults, it may make sense to weigh other options and open up a separate holiday savings account. That's especially true if your savings could be earning more interest elsewhere.
Learn more >> How to Use Sinking Funds to Save Toward Your Goals
Best Places to Keep Your Holiday Savings
1. High-Yield Savings Accounts
High-yield savings accounts pay higher interest rates than regular savings accounts. As of October 2024, interest rates of upward of 4% were available. Compare that to traditional savings accounts, which paid an average of .46% as of September 2024, according to the Federal Deposit Insurance Corp. (FDIC).
Small differences in rates add up over time. For example, if you open a high-yield savings account with $200 and save $200 a month for 10 months at a 4.5% interest rate, you'll have $2,240.87 at the end of 10 months. Higher savings goals and interest rates can net you even more.
Pros:
- Higher interest rates
- Easily accessible
- Most insured by the FDIC or National Credit Union Administration (NCUA)
Cons:
- Rates aren't guaranteed to stay at current elevated levels
- Number of withdrawals may be limited monthly before incurring a fee
Find High-Yield Savings Accounts
2. Certificates of Deposit
Certificates of deposit (CDs) can be a good way to make sure any seed money—say, part of a year-end bonus—is squirreled away for holiday spending. CDs differ from savings accounts in that you can't just add or withdraw money whenever you want; withdrawals made before the CD has reached maturity often come with a penalty. However, you may be able to find one that has a maturity period that suits your needs.
If, for example, you deposit a bonus in January, a nine-month CD would mature by October—in time for you to take advantage of interest earnings in time for the holidays. There are also no-penalty CDs, but they pay lower interest rates.
Some banks and credit unions have minimum deposits for CDs, but not all do. Again, a little research can pay off.
Pros
- Guaranteed interest rate
- Usually FDIC- or NCUA-insured
Cons
- Penalty if money is withdrawn before maturity date
- Possible minimum deposit
- Can't add extra money throughout the year
Learn more >> Savings Accounts vs. No-Penalty CDs: Which Is Better?
3. Money Market Accounts
Money market accounts typically offer check-writing and debit transactions, and may pay higher interest rates than traditional savings or checking accounts. Some may have minimum deposits or monthly maintenance fees.
Pros
- Attractive interest rates
- Often FDIC- or NCUA-insured
Cons
- May have minimum balance requirements
- Easily accessed if you are tempted to use the money for something else
Tip: Similar-sounding money market funds are investment products and are not intended to be short-term, accessible savings accounts.
Learn more >> How to Open a Money Market Account
4. Holiday Club Accounts
Holiday club accounts (sometimes called Christmas club accounts) have declined in popularity in recent years, but they're still offered by some credit unions and banks.
Holiday club accounts work by linking directly to your checking or savings account. Over the course of the year, you'll put away a certain amount of money every week or every month. Then, you'll get a deposit of the amount you saved, plus interest, in early November—right in time to take care of your holiday shopping.
That said, holiday club accounts may sound more appealing than they actually are. The amount of interest you'll typically earn from a holiday club account isn't as competitive as what you might expect with a high-yield savings account, money market account or CD.
Pros
- Automatic transfers
- FDIC- or NCUA-insured
Cons
- Usually less competitive interest rates
- Possible fees for withdrawals between January and November
Holiday Savings Tips
Here are some simple savings tips that you could consider implementing early to make the season bright.
- Look for ways to cut expenses. If you're able to slash one or two of your daily or monthly expenses from your budget, those extra funds can go directly into your holiday savings account. Maybe that means canceling a couple subscriptions, skipping your morning latte or ditching takeout—temporarily—until you reach your savings goal. The earlier you start, the more these compromises can add up.
- Consider a side hustle. The holiday season is a great time to pick up seasonal work or find a flexible gig in your area. For example, you could consider a part-time retail job, driving for a delivery service or even selling unwanted stuff online.
- Set a clear budget. To add some structure to your holiday spending, try writing down the names of everyone you want to buy gifts for. Then, set a dollar limit for each. Tally up your total, and make adjustments as necessary.
- Shop ahead of time. The closer you get to the holidays, the more urgency you'll feel to check names off of your list ASAP. If you're able to buy some of your presents early, you'll have more time to shop around for the best deal.
- Get thrifty. Keep in mind that some of the most thoughtful presents can be economical, too—think baked goods, homemade crafts, an offer to babysit, hand-picked bouquets and the like.
Learn more >> How to Make a Holiday Budget
It's Not Too Early to Start Saving for the 2025 Holidays
With your 2024 holiday budget top of mind, you may decide to approach the 2025 holiday season differently.
Making a holiday budget now and saving early can help make next year's holiday less stressful and more memorable. You can book travel knowing there's money in the bank and avoid the last-minute cuts and compromises when funds run short.
You can also evaluate which dollars from the 2024 holidays felt like money well spent—which holiday gatherings brought joy and which ones felt like obligations you'd just as soon opt out of next time. That gives you an outline of how—and how much—you'll want to spend as well as some motivation to get started.