Christmas Clubs and the All-Cash Christmas

When my mom started her first job around 1950 or so, she didn’t have a 401(k), but she did have a Christmas club. Every paycheck showed a deduction for her Christmas club savings account, an account she emptied each December to buy gifts for her family and friends. She tells the story about her Christmas club deductions in the same tone of voice my father uses when he talks about ten-cent ice cream cones, with a hint of nostalgia about the former way of doing things.

When my mom was working away in the 1950s, Christmas clubs were a pretty good idea. Ordinary workers rarely invested in the stock market (which was seen as something for rich people to do), and Christmas clubs provid


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4 Responses to Christmas Clubs and the All-Cash Christmas

  1. Joan says:

    Those old Christmas Club savings accounts used to actually pay interest. I wasn’t aware of any of them being offered through an employer. Wonder if the employer got a cut of the interest. If the employer was managing the savings, I imagine they had an agreement to get a kickback from the bank. Yeah, thanks, Boss, but I think I could go to the bank and open my own private Christmas savings account.

  2. JMBIndy says:

    I’ve recently learned that my bank offers a Christmas Club. That was news to me. The only way I found out, though, was through a friend who has one. I’ve yet to see any advertising in the bank branch for it.

  3. Jo says:

    There are still a number of financial institutions, including credit unions, that offer Christmas Club accounts. But the interest rates are miserly at best, as Joan mentioned.

    What I like about these types of accounts is that if you withdraw money any time during the year, you lose what amount of interest the account has earned. They’re typically hands off.

    I am reluctant to open a Club account to start anew for 2008 because of little to no interest given when the check is issued. But I want an account that I cannot withdraw from; so that said, I think one of my existing money market accounts would come as close to this and get a higher rate of return in the process. But! Only if I tell myself the account is off limits.

  4. kerry says:

    Christmas Clubs rock. There’s one run out of an Austrian restaurant in my city that is so popular (and the peer-reinforcement of the saving is so effective) that people are literally waiting for members to die, because they’re lined up for their spots! The money for the whole club is stored in an ING high-interest savings acct, and the members get a cut of the interest with their savings when it’s returned.

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