DEFINITION of 'Savings Club'

A savings club is a non-incorporated group that has opened some type of savings or other deposit account. The money in the account is the joint property of all club members, requiring regular deposits and allowing withdrawals on a set time frame.

BREAKING DOWN 'Savings Club'

The term savings club also refers to a special type of savings account that comes with a passbook with coupons. Most accounts of this nature mature on a regular basis (e.g. annually). Christmas club accounts are an example of this type of account.

How Savings Clubs Work

Savings clubs can be established with different terms and restrictions. Banks and credit unions might also offer savings club programs for their customers, however these “clubs” are not joint accounts with other customers per se. When offered by an institution, the depositor with a savings club account may have to adhere to a schedule that requires them to put funds towards the savings club on a regular basis, which could be weekly.

Such a club may be structured to help the customer save money towards a goal, for example to take a trip, pay for a wedding, or to buy a particular gift. A Christmas club account might be established to cover the cost of purchases that will be made for the holiday. The goal might also be to pay off a utility bill. Furthermore, this type of savings club may offer higher interest rates than compared with traditional savings accounts.

There may be penalties and stipulations designed to prevent the depositor from accessing the funds early. If the savings club generate interest, early withdrawals may force the depositor to forfeit any of those gains while the funds were in the account. Also, failure to make the regularly scheduled payment could also result in forfeiture of any interest that might have accrued.

Savings clubs established with a group of members can have a different structure. In this case, members might put the same amount into the account over intervals, in anticipation of receiving set payouts at later dates. This type of account might be established as an alternative to working with banks or other financial institutions and the terms are laid out and agreed upon by the members. Dependent on how the savings club is structured, members might only get back the same amount of money they put into it with no interest to be gained. On the other hand, this can also serve as a way to teach financial literacy and as a way to encourage individuals to actively save money.

RELATED TERMS
  1. Investment Club

    An investment club is a group of people who pool their money ...
  2. Member Payment Dependent Note

    A member payment dependent note is a type of note that is issued ...
  3. Country Club Billing

    Country club billing was a former system of credit card companies ...
  4. Linked Savings Account

    A linked savings account is a savings account that is connected ...
  5. Savings Rate

    Savings rate is the percentage of money take from personal income ...
  6. Bank Deposits

    Bank deposits are money placed into a deposit accounts at a banking ...
Related Articles
  1. Managing Wealth

    4 Tips for Joining an Investment Club

    These circles of like-minded people are a wonderful way to explore investing without laying out large sums.
  2. Managing Wealth

    Finding the Right Yacht Club: A Quick Guide

    Everything you ever wanted to know about how to do a shipshape search for a yacht club.
  3. Investing

    4 of the Best Yacht Clubs in San Diego

    If you want to hang out with the man credited with boosting the profile of the America’s Cup, head to this California coastal city.
  4. Personal Finance

    Buyers Clubs: Will You Really Save?

    Joining a buyers club can save you a few dollars, but there are a few other considerations you should take into account.
  5. IPF - Banking

    4 Savings Accounts for Investors

    Curious about the best saving accounts and which ones suit investors?
  6. Managing Wealth

    Are Wine Clubs Worth It?

    Some points to consider, before committing to a membership for yourself – or as a gift. The right club can also help you save money over the holidays.
  7. Managing Wealth

    How Much Puts You in the 1% Depends on Your City

    If you’re looking to join the 1% club, you can do it with an income not far above $100,000, but you won’t be doing it in the richest cities in America.
  8. Managing Wealth

    Four of Miami's Best Yacht Clubs

    Choices abound in Miami for boating enthusiasts, from high-end, high-priced yachting clubs to no-frill groups that still offer races, cruises and more.
  9. Insights

    Fitness Industry Feels No Pain from Online Trends

    Workout clubs are expanding their footprints as other retailers struggle to keep their physical locations.
  10. Financial Advisor

    Top 5 Places to Find and Meet Potential Wealthy Clients

    Personal connections with affluent people can grow a business quickly. It costs money to join the right organizations, but your new connections should pay off.
RELATED FAQS
  1. What are the benefits of an investment club and how can I find one?

    An investment club is a great way for investors to make money, share ideas and learn about the market from others. Learn ... Read Answer >>
  2. Why choose a money market account instead of a savings account?

    Learn how money market and savings accounts differ and why a depositor would choose a money market over a savings account. Read Answer >>
  3. Why is Manchester United (MANU) carrying so much debt?

    Learn how the Glazer family incurred substantial debt for its takeover of Manchester United, and understand how that debt ... Read Answer >>
Trading Center