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Old-time savings accounts make comeback at smaller banks

POSTED: January 2, 2009 5:00 a.m.

In the days before credit cards became common, many shoppers looked to establishing a Christmas Club account at the local bank to make sure they had enough money to purchase gifts for their loved ones.

As more people opened credit accounts and found other ways to purchase their gifts, holiday savings accounts fell by the wayside at many financial institutions.

"I think that’s a product that is a dying breed," said Chad Hargrove, who is the chief financial officer of Peach State Bank and Trust on Washington Street in Gainesville.

"Typically smaller community banks offer things like Christmas Club accounts, but that’s not something that we offer here."

Hargrove said there are many reasons why his institution and other banks are not offering traditional holiday savings accounts.

"Consumers are becoming more savvy, especially when it comes to internet banking where they can control (transferring funds to different accounts)," he said. "Most customers prefer being able to control when they can access their money instead of waiting for a bank to write them a check for their money."

With traditional holiday savings accounts, which were commonly referred to as Christmas Club accounts, customers would open an account at their bank where they would deposit funds that couldn’t be touched until later in the year, usually November. The purpose of the account was to give customers a way of saving money throughout the year for holiday gifts. Traditionally, if customers wanted to withdraw any portion of their account’s balance before the dispersal date set by the bank, they would be charged a penalty fee for early withdrawal.

While the demand for Christmas Club accounts is dying out at some financial institutions, others report that the tradition is flourishing.

"We had a demand for them several years ago, so as a company we decided to start offering the holiday savings accounts," said Thomas Fontaine, who is the assistant vice president of Georgia’s Own Credit Union and the manager of the Gainesville branch on Dawsonville Highway.

"Every year, we have more and more people taking advantage of that particular savings plan."

With the economy suffering the way it has been for the past year, more people are taking advantage of the opportunity to have a debt-free Christmas by saving extra cash earlier in the year through the holiday savings plan, Fontaine said.

"We can do payroll deductions and we disperse the funds from the holiday accounts around Nov. 1," he said. "Customers can start an account at any time. It’s really an easy avenue for people to save money for the holidays."

A unique fee schedule for the holiday accounts at Georgia’s Own Credit Union is one of the reasons why the accounts may be so popular at the institution.

"We don’t charge any fees for our holiday savings account, not even if they choose to withdraw their money early," Fontaine said. "And all of our accounts — even our holiday savings accounts — are insured through the (National Credit Union Administration), which is like the (Federal Deposit Insurance Corp.) for credit unions."



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