Savings Club

A “savings club” is a type of savings account set up by a group of people, usually for a specific purpose. If this sounds like another term for a joint savings account, it’s not. Well, it kind of is, but savings clubs operate a little differently than a normal savings account.

For one, like we mentioned, they’re usually set up for a specific purpose. And two, they usually come with a lot more rules and regs than standard savings accounts. For example, there might be rules about when deposits are due and who makes them. There might also be rules about when money can be withdrawn, how much can be taken out, and by whom. And three, they often pay a higher interest rate than normal savings accounts (which are paying, what, like .000001% interest right now, so that’s not hard to beat) because of all the restrictions.

The most common type of savings club is probably the Christmas club, but they’re not the only savings club game in town. Let’s say we’ve got four roommates sharing a house in Phoenix, Arizona. Phoenix gets crazy hot in the summer, which means utility bills can easily exceed $500 a month in June, July, and August, when they’ve got the central air running pretty much 24/7. Compare this to the $25 utility bills they usually get in the winter, and we can see where those summer electric bills could cause quite the headache.

Now let’s say our roommates open a savings club account: every month, they each put $30 into the account. The funds can be withdrawn three times a year—once in June, once in July, and once in August—and their whole purpose is to make sure they can afford those pricey summer bills.

Depending on the bank and the type of savings club we’re talking about, the rules—and the availability—of these kinds of accounts can vary quite a bit. So if a savings club sounds like it could be the answer to a problem our squad is facing, it might be worth a Google to see if it’s the right option for us.