Drawbacks
Key drawbacks of Christmas club accounts included low interest rates and a high number of restrictions, such as not allowing withdrawals unless fees were paid. The December 23, 1949 episode of the radio program Life of Riley highlighted these problems with an episode featuring Chester Riley visiting the bank to withdraw his Christmas club money. Riley had made only one $2 deposit, but the account had accumulated so many fees (for the passbook, for early withdrawal, and for the mailing of reminders) that Riley owed the bank another 25 cents.
Banks also incurred high costs in maintaining the accounts. According to Dennis Halpin, the CEO for the Capital Communications Federal Credit Union, the union had 3,500 Christmas club members in 1984. Each member required a check to be produced, signed, collated, and mailed, only for 70 percent to be returned to the bank to be deposited in another account.
Read more about this topic: Christmas Club
Famous quotes containing the word drawbacks:
“France has neither winter nor summer nor morals—apart from these drawbacks it is a fine country.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)