SEBRING — What happens when people don’t save for the holidays or other major expenses? What can be done to change the situation? According to a survey from MagnifyMoney, the average American accumulated $1,054 of debt this Christmas season.
Forty-four percent of the respondents said that they had more than $1,000 of holiday debt, and five percent had more than $5,000, according to the MagnifyMoney survey.
Local banks in Highlands County can help with the holiday shopping blues that often hit in January. There’s no need to feel sticker shock when opening up credit card bills this month. Instead customers can take advantage of savings accounts.
MidFlorida Credit Union offers a specialized holiday savings account called the Holiday Club.
“Ease your mind when it comes to shopping for the holidays by preparing all year long with a Holiday Club account,” MidFlorida’s website states. “By discouraging withdrawals prior to Nov. 1, you can keep your temptation in check and your holiday stress at a minimum. Holiday Club funds are paid out during the first week of November — just in time for all the big sales!”
According to a Help Desk representative, “People also open up special savings accounts to help them save for down payments on their homes. They can label the savings account, and it keeps down the temptation to take money from that account.
“People also set aside savings accounts for vacations,” the representative said.
MidFlorida offers 2.50 percent annual percentage yield (APY) on balances up to $4,000 in the Holiday Club accounts. People only need $20 to open an account, and there are no monthly fees.
There is a $5 fee to withdraw the money before Nov. 1, the representative said. However, the money can be taken out if needed.
Although Wauchula State Bank and Heartland National Bank do not offer a specific Holiday Club account, both of these banks do offer savings accounts people can use for the same purpose.
Wauchula State Bank offers a savings account that can be used for any type of savings — holidays, emergencies or vacations.
“The savings is an interest bearing account designed to accommodate for unforeseen emergencies or those special occasions,” Wauchula State Bank’s website states. “With only a $50 minimum opening deposit and a $300 minimum daily balance you will avoid a $3.00 monthly maintenance fee.”
Heartland National Bank also offers interest on its savings accounts. Customers must maintain a $300 balance to avoid the $4 per month fee.
“We do offer regular savings accounts that can be used for saving for any type of expenses including home repairs, holidays or vacations,” Heartland National Bank Senior Vice President Janice Walker said.
“We also offer a minor savings account which teaches children about saving and gets them into the habit of saving,” Walker said. “A good way to save is to have a fixed amount payroll direct deposited into your savings account from each paycheck.”
Health Savings Account
Besides saving for the holidays, many people also need to save for medical expenses, because they have high deductibles on their health insurance. Health Savings Accounts or HSAs help people with high insurance deductibles save for medical deductibles in ways that often help reduce taxes.
According to the Internal Revenue Service, the following qualifications must be met to use a Health Savings Account:
• You are covered under a high deductible health plan (HDHP) on the first day of the month
• You have no other health coverage (See IRS rules for exceptions)
• You aren’t enrolled in Medicare
• You can’t be claimed as a dependent on someone else’s tax return
“Heartland National Bank offers Health Savings Accounts where you can contribute to future medical expenses,” Walker said. “There are certain advantages to putting money into these accounts, including favorable tax treatment.
“Contributions can be made by you or your employer or both,” Walker said. “However the total contributions are limited annually. If you make a contribution you can deduct the contributions when completing your income tax return.
“You can use the money in the account to pay for any ‘qualified medical expense’ permitted under federal tax law,” Walker said. “Heartland National offers a free HSA account to qualified customers.”
Of course, customers are encouraged to speak with their tax professionals regarding specific advice for their situations.
MidFlorida doesn’t offer HSA accounts, the Help Desk representative said. Wauchula State Bank does offer HSA accounts, but did not not wish to comment.
Savings accounts help people save for the holidays and medical treatment. They help people avoid sticker shock from credit card bills and provide a way to cover high insurance deductibles.