A casualty of the declining national trend in household savings, the Christmas or holiday club account remains a sentimental favorite with some banks and credit unions.
But in Maryland, according to Maryland Bankers Association Communications Director Alison Tavik, another reason for the waning of this cyclical standby ? at least in its original conception essentially as a one-year certificate of deposit ? is a state banking law requiring at least a three percent interest rate on such accounts.
“We have a holiday savings account for the purpose of saving money for the holidays … or for special purposes or big-ticket items or vacations,” said Jack Goldstein, CEO and chairman of NBRS Financial, a state-chartered bank ? whose regular passbook interest rate is 0.45 percent ? with Harford County branches.
By allowing emergency withdrawals and not closing its holiday account after a set term, NBRS Financial can offer a 1 percent interest rate on the account.
“Most banks don?t offer them anymore,” Goldstein added, noting that his institution?s holiday account deposits amount to about $340,000 (out of $148 million in total deposits), “and one of the reasons we continue to offer it is because our customers ask for it. … When we analyzed it, 98 percent of those people had other relationships with the bank. So it?s actually been a proactive way for us to sell other services.”
But it?s a cross-selling method whose prevalence is hard to quantify.
“I think more and more banks are shying away from Christmas Club accounts,” said Cary Whaley, associate director of payments policy for the Independent Community Bankers Association.
Whaley added that ICBA did not track the offering among its members, a refrain also heard at the Consumer Bankers Association, the American Bankers Association and the Maryland Bankers Association.
The Credit Union National Association, however, reported that until 2001, it tracked the product?s prevalence among its 8,000 members; and 75 percent of them still offered the holiday club account ? a club in which Aberdeen Proving Grounds Federal Credit Union reported its continuing membership.
And, if ICBA Chairwoman Terry Jorde, who recently urged consumers to reconsider the benefits of the holiday account, gets her wish, more bank customers will also be saving up for their estimated $800 average holiday gift expenses instead of charging them.
