This year might be the perfect time for Australians to reconsider getting a Christmas Club account to stay on top of their finances especially during the holiday season, according to the Customer Owned Banking Association (COBA).

While Christmas Club accounts have been existing for a long time already, they have been overshadowed by credit cards and buy-now-pay-later schemes.

"With the rise of buy-now-pay-later schemes, we’re seeing a younger generation develop an appetite for credit culture. However, consumers need to be mindful of impulse buying and rapidly accumulating debt through these schemes," said Mike Lawrence, CEO of COBA.

Lawrence said Christmas Club accounts are a helpful way for Australians, particularly those in the younger generations, to manage lumpy expenses at a crucial time of year.

"Christmas Club accounts are a customer-focused product that help customers plan ahead and set savings goals that will leave them with a sense of relief rather than dread after the holidays are over," he said.

A Christmas Club account works like a short-term savings account that encourage savers to set aside a small amount every week. However, unlike a regular savings account, savers can only access their funds during a specified time of the year, which is usually before the holiday period.

"As an alternative option to manage holiday spending, Christmas Club accounts are a great way to consistently build on your savings throughout the year," Lawrence said.