All You Need to Know About Vacation Club Accounts
The days are getting longer and hotter, so that means summer will be here before you can say “flip-flops and sunscreen.” Summertime means week-long vacations, day trips and weekend getaways. All of those vacays can cost a pretty penny, though! How will you pay for your summertime expenses?
Lucky for you, as a member of Diamond Valley, you already have access to a range of savings options and loans that can help you save up for, or borrow money, to fund a large purchase, like a dream summer vacation. One of these options is the Vacation Club Savings Account or the Christmas 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 type of savings account in which the account holder makes regular contributions toward a predetermined 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The funds in a vacation club account can generally only be withdrawn when the predetermined goal has been reached.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. To discourage the account owner from deterring their progress toward their goal, early withdrawals from a vacation club account may be penalized.
What are some advantages of a vacation club account?
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.
- Name your account. Many financial institutions allow their members to name their vacation club accounts 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 vacay and then scramble for months after it to pay it all 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.
Is a vacation club account for everyone?
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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, 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, a vacation club may not be in your best interest, either. With your money tied up in your club account, 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. Happy summer!