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A Christmas club is a special-purpose
savings account A savings account is a bank account at a retail banking, retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditi ...
, first offered by various
bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
s and
credit union A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
s in the United States beginning in the early 20th century, including the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
. Bank customers would deposit a set amount of money each week into a savings account, and receive the money back at the end of the year for
Christmas Christmas is an annual festival commemorating Nativity of Jesus, the birth of Jesus Christ, observed primarily on December 25 as a Religion, religious and Culture, cultural celebration among billions of people Observance of Christmas by coun ...
shopping.


Origins

The first known Christmas Club started in 1909, when Merkel Landis, treasurer of the Carlisle Trust Company of Carlisle (Pennsylvania), introduced the first Christmas savings fund. The Club attracted 350 customers who saved about US$28 () each, and the money was disbursed on December 1 of that year. The January 2, 1920 edition of the
Belvidere, Illinois Belvidere is a city in and the county seat of Boone County, Illinois, United States. It is settled on the Kishwaukee River in far northern Illinois. Known as the 'City of Murals', Belvidere is home to several public art installations througho ...
''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 A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...
competed for the holiday savings business, offering enticing premiums and advertising items such as tokens. The Dime Saving Bank of
Toledo, Ohio Toledo ( ) is a city in Lucas County, Ohio, United States, and its county seat. It is located at the western end of Lake Erie along the Maumee River. Toledo is the List of cities in Ohio, fourth-most populous city in Ohio and List of United Sta ...
, 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, sometimes referred to by its initials A.C., is a Jersey Shore seaside resort city (New Jersey), city in Atlantic County, New Jersey, Atlantic County, in the U.S. state of New Jersey. Atlantic City comprises the second half of ...
, inscribed on the reverse: "Join our Christmas Club and Have Money When You Need It Most." In the February 2006 issue of ''
Forbes ''Forbes'' () is an American business magazine founded by B. C. Forbes in 1917. It has been owned by the Hong Kong–based investment group Integrated Whale Media Investments since 2014. Its chairman and editor-in-chief is Steve Forbes. The co ...
'' magazine, business writer
James Surowiecki James Michael Surowiecki ( ; born April 30, 1967) is an American journalist. He was a staff writer at ''The New Yorker'', where he wrote a regular column on business and finance called "The Financial Page". Background Surowiecki was born in Meri ...
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."Surowiecki, James. �
Bitter Money and Christmas Clubs.
�� Forbes.com. Feb. 14, 2006.
Slabaugh, Arlie R. (1966) ''Christmas Tokens and Medals''. Chicago: Author (ANA Library Catalogue No. RM85.C5S5)Reback, Marilyn A. (December 2006) ''Numismatist'', Volume 119, Number 12, pp. 57–60.


Drawbacks

Key drawbacks of Christmas Club accounts included low
interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...
rates and a high number of restrictions, such as not allowing withdrawals unless
fees A fee is the price one pays as remuneration for rights or services. Fees usually allow for overhead (business), overhead, wages, costs, and Profit (accounting), markup. Traditionally, professionals in the United Kingdom (and previously the Repub ...
were paid. Christmas Clubs later fell out of favor with consumers. Banks incurred high costs in maintaining the accounts. According to Dennis Halpin, the
CEO A chief executive officer (CEO), also known as a chief executive or managing director, is the top-ranking corporate officer charged with the management of an organization, usually a company or a nonprofit organization. CEOs find roles in variou ...
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% to be returned to the bank to be deposited in another account.


See also

*
Dynamic inconsistency In economics, dynamic inconsistency or time inconsistency is a situation in which a decision-maker's preferences change over time in such a way that a preference can become inconsistent at another point in time. This can be thought of as there b ...
- a theoretic model explaining the utility of costly savings devices such as Christmas clubs.


References


Notes


Citations


Bibliography

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External links


First Reliance Christmas Club Flyer, February 25, 2016
{{christmas Banking Christmas economics Christmas organizations