"What's Christmas time to you but a time for paying bills without money …"

– Ebenezer Scrooge in Charles Dickens' "A Christmas Carol"

Bye-bye, Christmas Clubbers. This year, the state's biggest bank, BofA, no longer offers holiday savings accounts.

Although seemingly an old-fashioned notion in an era of online banking, holiday savings accounts have been around for decades. Customers set aside automatic weekly or monthly deposits all year. Come November, the accumulated savings are freed up to be used for holiday spending.

BofA's recent decision to drop its holiday savings program was a disappointing surprise to Carmichael writer Richard Hellesen, who has held a BofA Christmas Club account with his wife for about 25 years.

"It's the 401(k) of Christmas," said Hellesen, adding that his family's $110-a-month holiday account delivered a reliable year-end stash that was spent on everything from the holiday tree to greeting cards and gifts. "It's enforced savings that you put away without thinking about and then use to avoid the January debt."

BofA spokeswoman Betty Riess said the bank notified customers in September that the holiday accounts, which were in use only by California customers, would be closed as of Nov. 1.

"We have not opened new holiday accounts for at least 10 years, so these were a very small number of accounts that were grandfathered into the program," Riess said.

Riess said BofA encouraged its former Christmas Club customers to switch to a regular savings account, which "essentially works the same way as the (holiday) account."

BofA's decision to drop its holiday accounts comes as the U.S. savings rate has climbed into positive territory for the first time in decades. According to the U.S. Bureau of Economic Analysis in Washington, D.C., the personal savings rate was 5.3 percent last year, up from 2.6 percent in 2006, before the recession kicked in.

Not everyone is abandoning their holiday savings plans; plenty of banks and credit unions still offer them.

Chico-based Tri Counties Bank says it has about 2,000 "Christmas Savings" accounts among its 68 branches. Schools Financial Credit Union offers holiday accounts that can be opened with as little as $1. And Golden 1 Credit Union has more than 12,000 customers enrolled in its "Santa Saver" program.

Holiday accounts are an excellent way to avoid overspending on "one of the biggest expenditures of the year," namely holiday shopping, says Mike Schenk, senior economist with the Madison, Wis.-based Credit Union National Association (CUNA).

"It's better to have money set aside to buy Christmas or holiday presents, rather than say 'I'll just put it on my credit card,' " said Schenk.

About 78 percent of CUNA's 7,300 credit union members offered some type of seasonal savings accounts to their customers, according to a 2008 study.

But like BofA, some local banks no longer offer the plans, primarily because so few customers are interested. A spokeswoman at El Dorado Savings Bank says it's been 20 years since they've had holiday accounts. Sacramento-based River City Bank dropped its program about three years ago.

Rita Beall, central operations manager for River City Bank, said it "wasn't a product people were asking for." The bank still maintains "a couple hundred" Christmas club-type accounts that belong to long-term customers, but doesn't open new ones.

Certainly, with their minimal interest rates, Christmas Club accounts – or any traditional savings account – aren't going to pile up cash. Bankrate.com says interest rates on holiday savings plans vary widely, earning anywhere from zero to more than a regular savings account.

Hellesen, for instance, said his holiday account typically earned "a buck twenty-five" – for the year – on $1,320 in annual savings.

But they do enable a forced savings plan that's convenient, automatic and out-of-mind all year long. When Nov. 1 rolls around, you've got a stash of cash for holiday spending.

"The idea is not to get rich," said Schenk, the credit union economist. "It's to make sure you have a pile of money when you need it … and don't have to use a credit card."

Holidays savings clubs get applause from credit counseling agencies, who see far too many clients struggling in January with unpaid bills.

"We're all for Christmas clubs and other things that prompt people to save money … so they have a good holiday without having to go into debt," said David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, based in Fairfax, Va. "Anything that stops the use of credit cards to pay for things is good."

As with any financial product, consumers considering a holiday savings account should shop around for the best interest rates and understand how the accounts work.

Tri Counties, for instance, states that if customers withdraw their holiday savings before Nov. 1, they could be charged a fee and have the account closed. Golden 1 says it will close a holiday account entirely if a customer takes out funds early.

Schenk, the credit union economist, learned his lesson the hard way. After joining a holiday savings plan a few years ago, "I just wasn't paying close attention to my banking." When his year-long savings were automatically dropped into his checking account, Schenk admits he didn't notice: "I went ahead and spent it on other stuff."

You don't need an official "Santa Saver" account to sock away money for seasonal spending. Any regular savings account can achieve the same purpose if it's set up with automatic deposits and not touched until the holidays.

Many Christmas club accounts get used for things other than holiday shopping, said Nicole Johansson, spokeswoman for Tri Counties Bank. For instance, she said, some bank customers use their Christmas savings to pay property taxes, which come due the first of December.

"We also see consumers who (say they) are 'saving for something', whether it be tuition and books for their children … or saving for a vacation."

As a working mom, Johansson said she loves using her holiday cash to stay on budget when toy-shopping for her two kids. "It is extremely empowering to pay cash for Christmas and not have to worry about credit card bills coming in January that could take months to pay off."

Even though his bank has abandoned its holiday savings accounts, writer Hellesen isn't giving up. He's already planning to put the same monthly deposits into a 2012 Christmas Club account – at his wife's credit union.

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Have a personal finance question? Call The Bee's Claudia Buck at (916) 321-1968.

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