A Christmas club is a special-purpose

savings account A savings account is a bank account at a 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. Traditionally, transac ...

, first offered by various

bank A bank is a financial institution that accepts 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 markets. Because ...

s and

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

s in the United States beginning in early 20th century, including the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

, under which bank customers 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, Jesus Christ, observed primarily on December 25 as a religious and cultural celebration among billions of people Observance of Christmas by country, around t ...

shopping.

Origins

The first known Christmas Club started in 1909, when

Merkel Landis Merkel Landis (January 5, 1875 – September 28, 1960) was an American lawyer and banker. A native resident of Carlisle, Pennsylvania, he was the treasurer and president of Carlisle Trust Company in Pennsylvania. He used his banking talents to ...

, treasurer of the Carlisle Trust Company of

Carlisle (Pennsylvania) Carlisle is a borough in and the county seat of Cumberland County, Pennsylvania, United States. Carlisle is located within the Cumberland Valley, a highly productive agricultural region. As of the 2020 census, the borough population was 20,118; ...

, introduced the first Christmas savings fund. The Club attracted 350 customers who saved about $28 each, and the money was disbursed on

December 1 Events Pre-1600 * 800 – A council is convened in the Vatican, at which Charlemagne is to judge the accusations against Pope Leo III. *1420 – Henry V of England enters Paris alongside his father-in-law King Charles VI of France. * ...

of that year. The January 2, 1920 edition of the

Belvidere, Illinois Belvidere is a city in Boone County, settled on the Kishwaukee River in far northern Illinois, United States. Known as the 'City of Murals', Belvidere is home to several public art installations throughout the North and South State Street histo ...

''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". 1925 - Christmas Club Invitation - Allentown Trust Company - Allentown PA

1925 - Christmas Club Invitation - Allentown Trust Company - Allentown PA

Promotion

For decades,

financial institutions Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...

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 and the county seat of Lucas County, Ohio, United States. A major Midwestern United States port city, Toledo is the fourth-most populous city in the state of Ohio, after Columbus, Cleveland, and Cincinnati, and according ...

, 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, often known by its initials A.C., is a coastal resort city in Atlantic County, New Jersey, United States. The city is known for its casinos, boardwalk, and beaches. In 2020, the city had a population of 38,497.

, 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 owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...

'' 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 borrower 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 ...

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 Repu ...

were paid. Christmas Clubs later fell out of favor with consumers. Banks also incurred high costs in maintaining the accounts. According to Dennis Halpin, the

CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

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.

References

Notes

Citations

Bibliography

External links

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