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.


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.