MOUNT VERNON — Christmas is the most popular celebrated holiday in the nation, and with it comes the joys of giving and the hardships of spending. Although some customers have opted to put their spending on credit cards, others have turned to Christmas Club savings accounts.
In Christmas Club savings accounts, account holders can have money automatically taken out of the account, or can manually place money in the account.
“The account can be opened at any time,” said Sherry Snyder, a deposit officer at First-Knox National Bank. “Typically, they are opened sometime in December, as they disperse in November. So if I opened a Christmas Club last December, I have until November to add to it.”
The accounts are generally dispersed in the first week in November.
“Ten dollars opens the account,” said Snyder, adding that the account holder can also make an automatic deposit to the account from another checking or savings account. “You can set up an automatic plan for say $10 every month, so that something goes into this account every month. That is usually what we encourage people to do; that is an easy way to save and build those funds up without making a large deposit at any one time.
“If you withdraw the funds prior to the actual disbursement of the proceeds, which is normally sometime the first week in November ... there is a $10 penalty,” said Snyder.
The account pays a flat interest rate.
“It’s paying a base rate no matter what the balance is,” she said.
“In November when it disperses, it disperses the whole balance, plus your interest. That is something that in the past we have done either by check or by transferring to another account. Next year it will only be by transfer, and it doesn’t have to be a First-Knox account. If you have your checking account with FirstMerit or National City, we can transfer the proceeds to that account so it does disperse the entire amount at that time,” said Snyder.
After disbursement, the account holder has 30 days to begin making new deposits into the account, or the account will close. A new one will then need to be started.
“So you have a 30-day period to start it over again,” said Snyder.
The Christmas Club program at First-Knox has over 1,300 members, and has been offered to customers for many years.
“It is nice that you can do small dollar amounts on a regular basis, which tends to add up at the end of the year,” said Snyder. “I think through the years people that have Christmas Club accounts have found them to be a nice way to set aside funds, and for the most part feel like they are not going to access these funds [until the holiday].”
The Peoples Bank of Gambier also offers Christmas Club accounts to its customers.
“On the 28th of October, [customers] can start opening up for the next year, so for 2009 we started taking in deposits on Oct. 28 for Christmas Clubs,” said Paul Wreede, president and chief executive for the Peoples Bank of Gambier. “Oct. 15 is the last day they can make a deposit, and then we cut them a check and send it out to them at that time for their Christmas Club. Then the cycle starts over again each year.”
To start a Christmas Club account with Peoples Bank, one has to have a minimum of $5 to open the account.
“[Customers can make payments] through auto transfer from their checking to the Christmas Club, they can pay in cash; there are a lot of options for them to set the money aside for Christmas,” said Wreede.
“We have been offering Christmas Club for about 50 years,” he said. “We are probably one of the few banks around that offers a Christmas Club, primarily because we are a community bank and it’s something we’ve had over the years; customers seem to like it. We don’t have a whole bunch of them, but it does give customers an option to set money aside for Christmas.”
Not all financial institutions have Christmas Clubs, but many do offer other forms of saving accounts to customers who want to save.
“We offer a savings account, but its not a Christmas Club,” said Kathy McKibben, branch manager for FirstMerit Bank. “Our regular savings would definitely be better for the interest rate than a Christmas Club.”
A savings club at FirstMerit only requires a minimum of $1 to open the account; the account holder must maintain a minimum $50 daily balance or have a monthly automatic transfer to the account in order to avoid penalty. On the 15th of the month of the customer’s choosing, a payout will be made, and during the time of payout, a bonus will be given as a part of the payout depending on the balance.
CES Credit Union does not offer a Christmas Club account, but does have savings accounts that can provide some of the same abilities as a Christmas Club.
“Most people have a certain amount put in each week and have it distributed around October, November. We can do that, but we operate it more as a savings account than probably what a traditional Christmas Club operates at,” said James McLaughlin, marketing director for CES Credit Union. “We don’t do necessarily a check at the end; you would just come in and redraw the money. That is basically how a lot of our members are doing it; they control when they take the money out. I know some will have a regular savings but then they will have another savings set up basically as their Christmas Club.”
He said a Christmas Club is something the credit union has been thinking about offering to its customers.
“[Christmas Clubs] are something that credit unions have gotten away from, but because of our economy, we were talking about setting it back up like the traditional Christmas Club,” he said. “For some reason the industry got away from it, mostly because it wasn’t very lucrative for a lot of financial institutions, and for a lot of years no one did it, but now it seems like it is coming back.”