The more things change the more they stay the same. In late summer of 2009, in advance of what was predicted to be a horrible shopping season, troubled American retailer Sears brought back two programs from long Christmas past: layaway and a Christmas savings club.
In a down economy, layaway plans allow a Christmas shopper to select an item months in advance and pay it off in small increments while it sits on the retailer’s shelf. The advantage of this to the shopper is obvious: you hang on your cash, you get the item you want and you don’t have to pay interest charges. The potential downsides are these: the items may go on sale cheaper later in the season once you have already signed a layaway agreement or you may have cash flow issues that prevent you from making future payments (especially on high ticket items), which would cause you to lose any money you have paid towards the item and the item itself.
Christmas savings clubs work a bit differently. Born of retailers long before the turn of the 20th century, Christmas savings clubs are just as a name implies – plans devoted to storing money, not merchandise – until the holiday shopping season. They went by the wayside as American prosperity and the growth of revolving credit emerged in the mid-20th century – mostly due to the paperwork and bureaucratic nightmare it created for retailers and banks that administered the programs.
A nightmarish economy and gift-card technology of the 21st century have revived the concept and it is a good one – if you like to do all your Christmas shopping in one place.
The new Christmas savings clubs offer a 3% bonus on any money you deposit within a certain time frame. That is a better rate of return than most modern savings banks. There are no refunds on money you deposit but the money always remains available and the bonus is only good on total deposits received within a certain time frame (usually from early spring to around mid-October to mid-November, depending upon the retailer).
Christmas savings clubs – available at major retailers like Toys R Us and Kmart and some smaller retailers – can be a boon for the tightly budgeted Christmas shopper. But folks can just as easily save their cash and get a slightly lesser return at a bank and then have the flexibility of spending their Christmas money wherever they want.