As the economy dipped, taking consumer confidence with it, once-trendy holiday and vacation savings plans began making a quiet re-emergence.
Known as Christmas club or vacation club accounts, these goal-specific accounts are once again catching on with consumers, according to interviews with bankers and those who use the plans.
They had fallen out of favor years ago, gone the way of layaway plans and full-service gas stations, yielding to the prevalence of credit cards and easy spending.
The number of club accounts nearly quintupled in 2008 from a year earlier at Ent Federal Credit Union, the largest based in Colorado. And the first two weeks of January indicate it might double this year.
There are no national numbers tracking the use of such accounts, but anecdotes indicate the desire to put money aside for a rainy day — even a day on the beach in the sunshine — is hot again.
“It’s an incredible way to meet those periodic expenses that can really do damage to your personal finances,” said Kim McGrigg, Consumer Credit Counseling Service of Greater Denver spokeswoman. “A lot of people have been going along paying for the many ghosts of Christmases past.”
The methods vary, but most work this way: You establish a savings goal and have a specific dollar amount deposited automatically from another account, usually checking, each pay period. Some accounts pay interest monthly or when the funds are dispersed for spending in October or November.
Some institutions restrict access to the funds until they are dispersed, though the account holder can change the deposit amount at any time. Other banks allow year-round access, requiring more self-discipline.
“It’s really a great way to separate the savings people have for rainy days from those they’d like to use for the holiday,” said Doug Schneider, vice president of marketing at Credit Union of Colorado.
Many financial institutions have amalgamated the variety of club accounts into a single savings generic. Wells Fargo, for instance, offers a personalized “savings plan” to online customers that can be used for anything from Christmas to retirement.
Few traditional banks still offer the club accounts, but the Credit Union National Association in Madison, Wis., says roughly 60 percent of the nation’s 8,000 credit unions do.
“We just started to save money instead of using a credit card,” said George Shoemaker, a financial literacy teacher at Money Management International in Denver and a Christmas club account devotee.
“The key word is discipline, and we’ve lost it,” he said. “It’s not a generational thing; it’s a country thing. The day of reckoning did come, and that’s where we are now.”
And the savings aren’t insignificant. The average holiday account in mid-October — just before the funds are transferred — at the Credit Union of Colorado had $727, Schneider said.
“We get to January and don’t have the bills to hurt us,” Shoemaker said. “They’re already paid.”
David Migoya: 303-954-1506 or dmigoya@denverpost.com
