This post was written by Lynn Weinstein, Business Reference Librarian in the Science, Technology, and Business Division.
Before there were credit cards, reward programs, certificates of deposit, and lay away, The Carlisle Trust Company of Pennsylvania started the first Christmas savings club in 1909. Christmas clubs are special short-term savings accounts set up by financial institutions to encourage depositors to build a nest egg for the holidays. These clubs are still around today and are often championed by credit unions.
Accounts are opened in December with a nominal deposit and are often spread out over fifty weeks, with checks being drawn to account holders in November. Holiday helper accounts are a systematic savings model that focus on saving and budgeting, and can start the journey to financial literacy for children. The notion is to provide those of small and modest means the ability to save money.
A sampling of ads found in Chronicling America, a free website of digitized newspapers provided through a partnership between the Library of Congress and the National Endowment for the Humanities (NEH), provides insight into the early marketing efforts for Christmas club accounts. Financial institutions sought to teach the value of savings, to “make savers out of spenders,” and to “help others to help themselves, ” while developing relationships with individuals they saw as potential future customers for automobile loans and mortgages. When the accounts were introduced, individuals could save as little as a penny a week!
The early advertisements for these accounts were geared towards families, employers, teachers, businessmen, and church parishioners. Adults were spurred to open up accounts for their children to encourage the habit of saving and thrift. In addition to experiencing the joy of saving, club members could experience the anticipation of buying Christmas presents for others.
These accounts have declined with the advent of new financial products and changes in consumer behavior. Holiday accounts are limiting, since you cannot take the money out before a particular date, they pay little interest, and there are no rewards programs. The accounts are also expensive for financial institutions to maintain. They can, however, prevent unwanted debt pile up for consumers, as they ensure that when the Holidays come there will be a lump sum of money on hand.