Christmas savings account

[broncofanfromia]

I just noticed that my bank has a Christmas savings account. Basically, automatically deposit an amount of money weekly into the account, and on the last week (Nov 20th of this year) they will make the final deposit for you.

So I'm going to be depositing 50-100 a week into the account, and they'll do the final deposit for me.

I look at it as an account with roughly 12.5% interest, depending on how much I put in there weekly.

Thought it'd be nice to share to see if anyone else's bank offered this kind of opportunity.

[Joan.of.the.Arch]

I've wondered why anyone would ever choose a so-called Christmas account. Every time I've noticed, they have lower interest than most accounts. If the bank matches a deposit that could be a good deal.

[jpg7n16]

I look at it as an account with roughly 12.5% interest, depending on how much I put in there weekly.

Sorry, how do you get the 12.5% interest?

They just give you one deposit regardless of how long the account has been open? And don't require a length of time to maintain it without forfeiting back that "free" week?

For 1 year, you would get $100 back after 51 weeks of saving $100, so $100/5100 = 1.96%

[minnie1928]

I can't fathom a bank that would effectively pay 12.5% interest on a club account. As a former banker (cost accounting) I was responsible for determining how much money each product made or lost. Holiday clubs are offered at a HUGE loss, even with the normally pathetic rates.

I'd look into the fine print...I'm guessing there is a limit on how much that final deposit will be.

[broncofanfromia]

I just set mine up, and they did not say anything about the fact that the deadline is only 7 weeks (Nov 20th) away. I started with my first immediate transfer of $100. In 6 weeks (entering my last week) I'll have $700 in there. During that last week, I'll "earn" $100 dollars on the account. 100/700 = 14.28%.

As far as losing money though, I can definitely see how they need some sort of limitation, so someone's weekly deposits aren't 1,000 or higher. They did not say anything to me though.

My bank is a fairly small chain and this is the first time I've seen them offer something like this. So maybe this is a mistake on their part since it's their first time with something like this?

[Ima saver]

It sounds like a great deal to me!!

[jpg7n16]

If that's true, then you should borrow $120,000, and deposit $20k/week for 6 weeks. Then cash out $140k, pay off the loan, and pocket $20k for free.

Someone somewhere must have thought that through when offering the account.

I would suggest that you review the terms of the account with your banker, and if it really will do that, then borrow as much as you possibly can (if they'd give you a $6 million loan, then do it - you'd make $1 million for free for no reason, in just 7 weeks)

[minnie1928]

My bank is a fairly small chain and this is the first time I've seen them offer something like this. So maybe this is a mistake on their part since it's their first time with something like this?

Where do you live? I think I need to offer them my consulting services!

[disneysteve]

It sounds like a great deal to me!!

Sounds too good to be true to me. OP, can you post the name of the bank. I'm curious if the promotion is on their website. I'd like to read the terms. There must be more to it than what you've said because that offer is way too generous to be real. The way you describe it, they'd be losing money on every single account whether the account holder deposits $100/week or $5/week.

[broncofanfromia]

You guys were right, too good to be true. There was a rather critical typo on their website. You had to open your account by November 2009, it used to read 2010. They did let me open it, but they will adjust the final deposit to the same rate as if I'd had it open the whole year.

[Jehnavi]

Ah, but the advantage of a christmas club account over a regular savings account (or at least, this was the case when I had one as a kid through the credit union I was a member of - I'm hoping they still have the program since I've just rejoined them) is that with the christmas club account, you can't withdraw the money you deposit until the set time period is up. So there's no possibility of sabotaging yourself.

[fruitbowlk]

My bank does this and I do it every year. But this year instead of using it towards christmas I added it to my EF.

[Eric80]

Don't you think 12.5% is a higher rate instead? There must be some conditions, I'm not sure. But needs to properly read the terms first.