Yes, there is a Christmas Club.
Like Santa Claus, fruit cakes and caroling, the old-fashioned savings program remains a holiday tradition at many financial institutions - so says Virginia McGuire, spokeswoman for the American Bankers Association in Washington.
Even though the savings plans may pale in comparison with more-lucrative investment vehicles, many institutions have been reluctant to drop them because of customer demand. In fact, some report that demand is actually rising lately.
“For a while it went out of style, but they seem to be making a comeback,” McGuire said. “It’s kind of like old clothing from the ‘60s is back in style today.”
The ‘90s version of the Christmas Club, which dates back to the turn of the century, is noticeably different from clubs of years past.
Most banks have now renamed them Holiday Clubs. And some have even abandoned the old coupon book, which customers get stamped weekly by a teller, in favor of less personal direct deposit or payroll deduction.
Whatever their form, industry analysts believe they’ll be around for years to come, just like the low-yielding passbook savings account.
“This is all nostalgia,” said Robert K. Heady, publisher of the Bank Rate Monitor newsletter in West Palm Beach, Fla. “We’re all taught as kids to go up to the teller and put $1 a week away, and then we’ll have $52 by the end of the year to buy Aunt Sophie an apron for Christmas.
“It’s hardly what you would call an investment. Santa couldn’t feed any of his reindeer on what you make on a club account.”
To be sure, Holiday Club yields are almost Scrooge-like when compared to what individuals can earn on other savings products and investments. And they often have a host of restrictions attached, like penalties for early withdrawal.
While no organization regularly keeps track of club rates any more, a random survey found financial institutions offering Holiday Club have yields ranging from around 2.5 percent to 3.5 percent, depending on whether a coupon book was used. Many big banks, such as Wells Fargo and Bank of America, have eliminated the books altogether, relying on electronic fund transfers that automatically move money to the holiday account.
“For years they (Christmas Clubs) didn’t even have interest, just a gift for opening an account. They started giving interest in the ‘50s,” said Frank Mosher, president of Security Savings Systems Inc. of New Cumberland, Pa., which has been printing club coupon booklets used by banks for the past 67 years.
Mosher says he expects to print about 2 million coupon books this year, about the same as last year, though a far cry from a couple decades back when 8 million to 10 million were printed up.
“I don’t know if you’d call that a big comeback, but we are busier,” he said.
Competitor Lorraine McPeek, an account executive for CC Marketing, a Dawsonville, Ga., company that also provides marketing materials and passbooks for bank holiday clubs, says she also has been busier than usual.
“I definitely see a resurgence,” she said.