Summer is quickly approaching! Summertime means week-long vacations, day trips and weekend getaways. All of this can cost a pretty penny, though! How will you pay for your summertime expenses? One of these options is the Vacation Club Savings Account.
Let’s take a closer look at this savings vehicle and how it can help make summertime leisure more affordable.
What is a club account?
A club account is a savings account where the account holder makes regular contributions toward a goal. Just as Christmas club accounts are intended to be used for saving up for holiday expenses, vacation club accounts are designed to help the account holder save up for vacation expenses. Spreading the cost of a large, seasonal expense throughout the year makes it easier to handle.
Are there restrictions on vacation club accounts?
The funds in a vacation club account can generally only be withdrawn when the predetermined goal has been reached. This may be a specific date or amount of money. United Texas pays out the funds on April 1st each year. To discourage the account owner from deterring their progress toward their goal, early withdrawals from a vacation club account may be penalized. United Texas allows two withdrawals per year on vacation club funds.
What are some advantages?
As mentioned, vacation club accounts make dream vacations affordable by spreading the costs throughout the year. However, there are many more benefits to opening a vacation club account. Here are just a few:
- Incentive to save. Having a separate place to keep your vacation funds makes it easier to track your progress and incentivizes you to keep saving.
- Naming your account. You can name your vacation club account with a custom title. For example, you may be able to call your account “Europe Vacation 2022.” Attaching your vacation plans to your club account helps make it real and will motivate you to stick to your goal.
- Builds strong saving habits. Making regular monthly contributions to a savings account is a great workout for your savings muscle and a big boost to your general financial health.
- Prevents overspending and debt. Lots of vacationers will swipe or borrow their way through a vacation and then scramble for months to pay it back. The financially responsible way to pay for a vacation is, of course, to save up for it before setting out. A vacation club helps you do just that.
- Keeps vacation money out of sight. Out of sight, out of mind. You can’t spend that vacation money when it’s on deposit with the credit union.
- Favorable interest rates. Vacation club accounts tend to offer more generous dividends than other accounts.
Is a vacation club account for everyone?
While vacation club accounts offer a convenient way to save up for a dream getaway, they may not be the best choice for every individual.
First, club accounts restrict the account holder’s access to the money. If you do not have a sufficient emergency fund and/or another safety net, then you’re likely better off building up your general savings before opening a vacation club account.
Second, if you’re the kind of vacationer who likes to plan bits and pieces of your getaway throughout the year, then a vacation club may not be in your best interest, either. If your money is tied up in your club account, then you won’t be able to use the funds to book airline tickets in November, make hotel reservations in February and arrange a car rental in April.
Vacation club accounts make summer getaways affordable by spreading the costs throughout the year, but they may not be for everyone. Consider this info about these specialty accounts and make an informed decision.
Your Turn: Do you have a vacation club account? Tell us about it in the comments.
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