Christmas club
Encyclopedia
The Christmas club is a savings
program that was first offered by various bank
s during the Great Depression
. The concept is that bank customers deposit a set amount of money each week into a special savings account
, and receive the money back at the end of the year for Christmas
shopping.
Daily Republican announced that the town’s State Farmers Bank was encouraging parents to enroll their children in the Christmas Banking Club "to develop self-reliance and the saving habit."
s. The Dime Saving Bank of Toledo, Ohio
, issued a brass token "good for 25 cents in opening a Christmas account" for 1922-1923. There were also numbered tokens issued by the Atlantic Country Trust Co. in Atlantic City, New Jersey
, inscribed on the reverse: "Join our Christmas Club and Have Money When You Need It Most." In the February 2006 issue of Forbes
magazine, business writer James Surowiecki
summarized the accounts' appeal: "The popularity of Christmas club accounts isn't a mystery; if their money was in a regular account, people assumed they'd spend it."
rates and a high number of restrictions, such as not allowing withdrawals unless fees were paid. The December 23, 1949 episode of the radio program Life of Riley highlighted these problems with an episode featuring Chester Riley visiting the bank to withdraw his Christmas club money. Riley had made only one $2 deposit, but the account had accumulated so many fees (for the passbook, for early withdrawal, and for the mailing of reminders) that Riley owed the bank another 25 cents.
Banks also incurred high costs in maintaining the accounts. According to Dennis Halpin, the CEO
for the Capital Communications Federal Credit Union, the union had 3,500 Christmas club members in 1984. Each member required a check to be produced, signed, collated, and mailed, only for 70 percent to be returned to the bank to be deposited in another account.
Saving (money)
Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in a bank or pension plan. Saving also includes reducing expenditures, such as recurring costs...
program that was first offered by various bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s during the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. The concept is that bank customers deposit a set amount of money each week into a special savings account
Savings account
Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money . These accounts let customers set aside a portion of their liquid assets while earning a monetary return...
, and receive the money back at the end of the year for Christmas
Christmas
Christmas or Christmas Day is an annual holiday generally celebrated on December 25 by billions of people around the world. It is a Christian feast that commemorates the birth of Jesus Christ, liturgically closing the Advent season and initiating the season of Christmastide, which lasts twelve days...
shopping.
Origins
The first known Christmas club started in 1909, when Merkel Landis, treasurer of the Carlisle (Pennsylvania) Trust Company, introduced the first Christmas savings fund. The club generated 350 customers who saved about $28 each, and the money was disbursed on December 1 of that year . The January 2, 1920, edition of the Belvidere, IllinoisBelvidere, Illinois
Belvidere is a city in Boone County, Illinois, United States. The population was 25,585 as of the 2010 census. It is the county seat of Boone County. Belvidere is part of the Rockford, Illinois Metropolitan Statistical Area.-Geography:...
Daily Republican announced that the town’s State Farmers Bank was encouraging parents to enroll their children in the Christmas Banking Club "to develop self-reliance and the saving habit."
Promotion
For decades, financial institutions competed for the holiday savings business, offering enticing premiums and advertising items such as tokenToken coin
In the study of numismatics, tokens are coin-like objects used instead of coins. The field of tokens is part of exonumia. Tokens are used in place of coins and either have a denomination shown or implied by size, color or shape...
s. The Dime Saving Bank of Toledo, Ohio
Toledo, Ohio
Toledo is the fourth most populous city in the U.S. state of Ohio and is the county seat of Lucas County. Toledo is in northwest Ohio, on the western end of Lake Erie, and borders the State of Michigan...
, issued a brass token "good for 25 cents in opening a Christmas account" for 1922-1923. There were also numbered tokens issued by the Atlantic Country Trust Co. in Atlantic City, New Jersey
Atlantic City, New Jersey
Atlantic City is a city in Atlantic County, New Jersey, United States, and a nationally renowned resort city for gambling, shopping and fine dining. The city also served as the inspiration for the American version of the board game Monopoly. Atlantic City is located on Absecon Island on the coast...
, inscribed on the reverse: "Join our Christmas Club and Have Money When You Need It Most." In the February 2006 issue of Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine, business writer James Surowiecki
James Surowiecki
James Michael Surowiecki is an American journalist. He is a staff writer at The New Yorker, where he writes a regular column on business and finance called "The Financial Page".-Background:...
summarized the accounts' appeal: "The popularity of Christmas club accounts isn't a mystery; if their money was in a regular account, people assumed they'd spend it."
Drawbacks
Key drawbacks of Christmas club accounts included low interestInterest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
rates and a high number of restrictions, such as not allowing withdrawals unless fees were paid. The December 23, 1949 episode of the radio program Life of Riley highlighted these problems with an episode featuring Chester Riley visiting the bank to withdraw his Christmas club money. Riley had made only one $2 deposit, but the account had accumulated so many fees (for the passbook, for early withdrawal, and for the mailing of reminders) that Riley owed the bank another 25 cents.
Banks also incurred high costs in maintaining the accounts. According to Dennis Halpin, the CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
for the Capital Communications Federal Credit Union, the union had 3,500 Christmas club members in 1984. Each member required a check to be produced, signed, collated, and mailed, only for 70 percent to be returned to the bank to be deposited in another account.