BILOXI, Miss. -
That’s because holiday clubs or “Christmas clubs” reached their peak around the time from the Great Depression to just after World War II, which is why they are perceived as a savings tool used by older people who for years lived on a tight budget. (Today, Christmas Club remains a registered trademark, and christmasclub.com is a holiday-related shopping site.)
It’s believed that the first Christmas club was started in 1909 in Carlisle, Penn., when approximately 350 people saved around $28 each, according to the Albany Business Review.
A holiday club allows people to put away a certain amount of money on a regular basis–usually weekly or bi-weekly. Typically in early November, the bank or credit union returns the money, plus interest. The club member should then theoretically have funds to shop for the holidays without going into debt.
The Christmas clubs have not been without their critics over the years, with many consumers complaining about high fees and low interest rates associated with the clubs. Institutions, too, have often offered the accounts out of civic duty more than anything else, citing the costs involved in maintaining the low-balance, high transaction accounts.
Despite the notion that Christmas clubs are often thought of as a throwback to the past, three out of four credit unions offer holiday savings accounts, according to the CUNA.
For folks at Biloxi Mississippi-based Keesler FCU, the Christmas savings program is alive and well. In fact, this year Keesler FCU disbursed 2007 Christmas Savings account proceeds totaling $4.26-million to about 16,500 of its 187,000 members worldwide–a participation rate of about 9%.
Dividends of 2.25% were paid on these accounts–higher than the area average of 1.92% based on a survey by the Credit Union Journal of a handful of area credit unions.
“It’s been very popular for quite some time,” said KFCU advertising manager Pam Belk. “I’ve seen a steady increase in the number of accounts that have been opened over the 10 years that I’ve been here.”
One of the reasons the Christmas savings account is so popular at the $1.5-billion KFCU, is that it is actively promoted by staffers through CU-sponsored contests and marketing brochures.
“We normally try to cross-sell the Christmas savings account to members when they come into a branch,” Belk said. “We’ll tell them how opening the savings account can help them save for Christmas.”
KFCU employees also compete with one another intra-branch and with their counterparts at 13 branches in South Mississippi and four branches on Royal Air Force Bases in the United Kingdom in contests to see who can get the most members to open a Christmas savings account.
Belk said the contests are a great way to bolster friendly competition among employees, increase the number of accounts that are opened and help members save for the holidays. Members are now being encouraged to open their 2008 Christmas Savings accounts. There are no fees for early withdrawal of Christmas savings account funds, according to a KFCU rep.
Belk said she was unaware of what members are using the savings account funds for this year, but that the goal of the CU is to serve its membership the best way it can.
