Stamp Those Christmas Clubs...account Closed

October 21, 1994|By Jean Marbella | Jean Marbella,Sun Staff Writer

They're throwbacks to a simpler and thriftier past, a time more Norman Rockwell than Gold Card, a time when we earned freebies by licking S&H green stamps into a book rather than racking up frequent flier miles.

Christmas Clubs -- remember them? Every week, you tore a coupon out of your book, went to the bank with a deposit as small as 50 cents and then, come October, the teller handed you a cheerily decorated check of your accumulated savings -- sometimes with a little bit of interest -- and you started Christmas shopping.

But that once-pervasive ritual is slowly going the way of those old S&H green stamps. This week, Provident Bank of Maryland became the last of Baltimore's large banks to close down its Christmas Club accounts, joining the trend away from this low-tech savings device.

Some smaller banks and credit unions still offer Christmas Clubs -- and say they remain popular. But the larger institutions say Christmas Clubs have lost their appeal with both customers, who increasingly would rather charge now and pay later, and bankers, who don't make much money handling all those small deposits.

"What you have is a change in culture," said Stewart McEntee, senior vice president for marketing at the Bank of Baltimore, which discontinued Christmas Clubs in 1987. "You had a whole generation that was used to rationing and doing things in a disciplined way. It was the philosophy of save and wait until you had the money for it. It was part of the Depression, and the rationing during World War II. But then a whole different consumer came into the marketplace -- baby boomers who were the first generation to take to the credit card."

Provident actually discontinued its Christmas Clubs some years back but, after repeated requests from customers, re-introduced them two years ago. Some 5,000 to 6,000 customers signed up for Christmas Club accounts, but the bank decided that the program was too labor-intensive.

"For the little bit we advertised, we had a good amount of interest in it, but the problem is the balances were real low," said Laurie Rush, assistant vice president of product management for Provident. "From a profit standpoint, it was not real advantageous. On the average, people had balances of $100 or less."

Provident, like other banks, encourages customers to continue saving regularly -- they just won't call the accounts "Christmas Clubs" anymore.

But, for some, that was the appeal: the festively decorated coupon books or passbooks that allowed them to watch their savings grow week by week until they received a tidy check for holiday gifts.

"It's a tangible thing," said Joe Martin, an account executive with CC Direct Marketing, an Allentown, Pa., company that sells Christmas Club displays, coupon books, passbooks and checks banks. "They remind you to make the payments every week and then in the end, you get a check. It's fun money."

Some banks didn't even pay interest on the accounts but just held on to your money to keep you from frittering it away and ending up empty-pocketed at Christmastime. Those that do pay interest give a minimal amount -- currently, about 3 or 3 1/2 percent locally -- and the Christmas Club was never meant to compete with the high-roller, big-interest options.

"I have found it a nice way to save, and come October, I have the money to spend for Christmas -- for the grandchildren," said Marjorie Scott, 71, of Cockeysville, one of the 65 customers at Wyman Park Federal Savings & Loan who recently received their Christmas Club checks after dutifully paying into them over the past year.

"I like the convenience of it," says Ms. Scott, who makes monthly visits to the bank to put money from her retirement check into her Christmas Club account. "I leave the money there. I just don't touch it."

While she'll use credit cards occasionally, she refuses to let balances carry over. "Their interest rates are too high," she says.

Perhaps more than anything, the proliferation of credit cards has led to the demise of Christmas Clubs.

The instant gratification of plastic -- compared to the dutiful, save-first-buy-later of the Christmas Club -- has turned us into a nation of spendthrifts increasingly comfortable with being in debt. The Federal Reserve Bank reported earlier this year that consumers borrowed $8.9 billion more than they paid off, setting new record in credit-card use.

Too much debt

Brandi Thurman's share of that debt is what convinced the 22-year-old Baltimorean to start putting $20 a week in a Christmas Club account last year.

"The year before, instead of putting out the cash, I charged," Ms. Thurman said with a shudder over the memories of her credit card balance. "I got that check, and I'm like, 'Yes! I'm depositing it in my checking, and I'm going shopping today!' "

Ms. Thurman, a teller at St. Casimirs Savings Bank in Baltimore, spent much of this week spreading the holiday cheer as the bank started giving out more than 1,100 Christmas Club checks at its four locations.

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