Club Accounts … Dinosaurs or Differentiators?

I like the hard-working marketers that I know in credit unions and elsewhere, but I can’t imagine marketers as a rule like me too much. Why? You’ve heard of that consumer sweet spot for marketers called the “early adopter”?  

That ain’t me. I’m nestled safely in the consumer niche known as “Are you nuts?! I can’t believe you don’t have that!” Need a for-instance or two?  I finally got a cellphone about five years ago. I love music, but I don’t have any sort of MP3 player. My lawn mower is a push job, and if I need leaves cleared out or a tree cut down, I grab a rake or axe out of the shed.

It’s the same way with banking, too. An recent article in the Raleigh News & Observer noted the popularity of Christmas Club and other such account offerings among credit unions. A cool stat in the story noted the first club accounts appeared at a bank in 1909.  

I am 45 years old and have known about these types of accounts for many, many years … and yet I just signed up for my first Christmas Club Account. Last week.

The article cited the programs offered by some NC credit unions, and also noted that more than 3/4 of credit unions still offer them nationally. Meanwhile, banks have largely discontinued these accounts, with one CEO saying that the accounts are no longer popular. “In today’s world, people use credit cards,” he was quoted as saying.

(The story also speculated that these accounts don’t make money for the institution, which is why banks have discontinued them.)

So have I come to the party at the bottom of the proverbial punchbowl? Are club accounts popular with your members and a point of differentiation (albeit small) for credit unions? And to whom do they appeal (besides middle-aged people without leaf blowers and iPODS)?

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10 Responses

  1. As a teller I saw Christmas and other Club accounts pretty frequently. They still seem to be a good way of setting aside money that wouldn’t typically be saved. I recently opened my first club account to save for a summer car repair and it’s been incredibly helpful in keeping my finances organized. I think that as the economy continues to slide, and people turn to budgeting to help them, the club will remain a relevant product and something that sets us apart from banks just a little bit more.

  2. “In today’s world, people use credit cards.” That sounds so bank-stereotypical!

  3. Maybe you should consider changing the name of your blog to “The CU Luddite”.

  4. Hahaha, I’m certainly ready to protest for the credit union movement…but I am far from being against technological change. Although I do feel like smashing my computer from time to time 🙂

  5. @Andy – it’s good to hear that people still value these accounts! Your reasoning for signing up is exactly what lead me to open the Christmas Club.

    @Trey – or in his case … “At my bank, people use credit cards.”

    @Ron – haha! Do you know anything about debit cards? I may have to get one in a few years, now that I’ve made the leap to a club account. 😉

  6. While I agree that many people use credit cards, credit unions promote thrift and savings. When people are ready to create a budget and plan for their expenses, a club account is a good way to go. That being said, I’ve never seen them marketed aggressively. What if they were called “rainy day funds?” Most financial counselors urge people to save 3 to 6 months salary in a liquid account. Creating an account designed to help consumers meet that goal would be worthwhile. And guess what? You don’t need to create anything. It already exists at most credit unions.

  7. We do not offer “club accounts” and I honestly had to google that term to find out what it meant. I think it’s a good idea, but I don’t like the name for some reason. I like “rainy day account” better.

    Anyway, I’m a marketer’s nightmare too. I just got a cell phone 3 years ago, an ipod last year, have a Blackberry for work that I never use, don’t have cable and have not caved in to Facebook/Myspace. And I’m considered Gen Y to some folks, although I think I’m Gen X.

    I love the idea of promoting thrift. We just launched our high-yield checking account and I put almost all my money into that right away. Front liners pointed out that some members will be reluctant to do so since it’s a transactional account. I guess discipline is a huge issue for a lot of people. I am a born saver though, so it’s tough trying to get people interested in saving when it comes so naturally to me.

  8. I agree with Anthony. CU’s are here to promote thrift, not necessarily buying Christmas on credit cards. These accounts are not profitable. They cost money to maintain, which is why most, if not all, banks have discontinued them. We continue to have a strong demand in these accounts, albeit a very, very small part of our balance sheet. Like .2%.

  9. I say anything that credit unions can do to help members manage their money AND be different from banks is a very good thing.

  10. @ Anthony, Terrell & Robbie – those are all great points. Maybe the Club Account needs a bit of a facelift (or additional options?) to address the lack of consumer/member saving.

    Terrell – I checked out that HY checking product on the Verity web site and really love that! Good luck with it – if that comes to NC, that’ll be something that I’ll be more than happy to “early adopt.” 🙂

    @ Tim – couldn’t agree more.

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