Holiday savings clubs boom in bad economy

Nov 23, 2008 (The Times-Tribune - McClatchy-Tribune Information Services via COMTEX) -- MTB | Quote | Chart | News | PowerRating -- Amanda Volciak of Freeland opened her first Christmas club this year because she wanted to have a dedicated amount of money to shop for the holidays and because it was convenient.

And she had another reason: "We (she and her husband Jason) spoil our nieces and nephews."

Before the boom of credit cards, Christmas clubs were a popular method at banks and credit unions to help with holiday shopping. Consumers would put a certain amount of money into the account each week during the year.

In these tough economic times, the clubs have made a comeback -- in one form or another.

Mrs. Volciak's club at the Cross Valley Federal Credit Union is set up differently than the traditional Christmas club. Instead of a set payment plan, the Cross Valley club offers flexibility.

"You don't have to put in a set amount," she said. "You can put as much in as you can, when you can. That's what I like about it."

The club earns 0.5 percent interest until the first week of October when it matures, explained Gina Murmello, Cross Valley's Hazleton branch manager.

Upon maturity, the customer can transfer the Christmas club money into another account or cash it out, she said, adding there is no coupon book.

Choice One Community Federal Credit Union also handles its Christmas club differently than a commercial bank.

"At a typical bank, there's a start date, and you have to contribute $10 per week," said Jill Koptcho, vice president for member services for Choice One Community Federal Credit Union. "In our Christmas club, the account is ongoing. If you miss a week, no problem. How much you put in is your business. We don't let you withdraw until between Oct. 1 and Dec. 31."

The club also carries a 0.5 percent interest rate for club accounts over $100.

"It's a way to save for Christmas," said Anne Ferris, a Choice One teller. "It's good because we have payroll deduction. And it keeps on going, you don't have to renew it. They are real popular with our members."

Area banks are seeing their customers use traditional Christmas clubs for different purposes, such as to pay off large bills once the club account matures.

"Some people use them to pay their taxes," said Christine Gresh, First National Community Bank (FNCB). "We do them by payroll deduction, or by a coupon book."

M&T Bank has a devoted following for its Christmas, or holiday, club and it first cousin, the vacation club, said Karen Chase, vice-president of consumer deposits for M&T.

"We have niche clients who've had the clubs for a very long time," she said. "We will continue to offer them."

At Susquehanna Bank, the traditional Christmas club is less regimented, including its name.

"We don't refer to them as Christmas clubs," said Steven Trapnell, corporate communications manager for Susquehanna Bank. "They are called Fall Savings Clubs, because we have a couple of different ones."

The banks allow customers to transfer money into the clubs from their bank accounts in addition to more traditional deposit methods, such as through coupon books.

At Susquehanna, customers can even select the maturity date on their vacation clubs.

At Keystone Nazareth Bank and Trust (KNBT), a division of National Penn Bank, the traditional Christmas club has morphed into an general savings plan.

"We've changed it to make it more efficient for the customer and the bank," said Linda Smith, senior vice president and regional manager for KNBT. "We have an auto savings plan, which can be called a Christmas club, vacation club, furniture club, anything you want."

Customers have to make at least one automatic transfer from another account for it to qualify as an auto account. After that, customers can make as many deposits as they want and change the amount any time, Ms. Smith said.

Contact the writer: jdino@standardspeaker.com

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