Would You Bank With Toys "R" Us?

You don’t remember the “Christmas Club.” But your mom might. Put a little money away at a department store, or even a bank, and get it back–typically with no interest–in December, just in time for the holidays. Most of us now go the reverse Christmas club route: instead of spend now, buy later, we strongly prefer to do it the other way around. With its “Christmas Savers Club” Toys “R” Us is hoping to change that.

Not surprisingly, buying in has more benefit for Toys “R” Us than it does for you. But if you’re already a Toys “R” Us customer, and your preferred method of Christmas spending involves phrases like “It’s everywhere you want to be,” then there are worse things you could do than sign up for a Christmas Club card.

Here’s the plan: as of yesterday, you can go to any Toys “R” Us store to sign up. You give them cash in exchange for what appears to be a gift card –but you can’t spend it yet. although you can add money whenever you want. On October 16, your total will earn 3% interest (not compound, not monthly, just 3%. Put $100 on it and you get $103, $1000 and you get $1030) and on October 31, the card and its total value can be used for purchases at stores or on the web.

So if you have a few hundred bucks burning a hole in your pocket and no interest paying bank account to sock it into (or no willpower to ensure that it will go untouched until holiday shopping rolls around)–well, it’s certainly better to save your money and then spend it than it is to spend it and then face the bills, and the interest that accompanies them, even if it means both giving Toys “R” Us a below-market loan, and locking yourself into buying gifts at a Toys or Babies “R” Us (even when the go-to gift of the year might not be in stock).

But note that you can only put money onto the card by walking into a Toys “R” Us store. And how many times have you done that in the last year and left without spending a thing?

The “Christmas Savers Club” is better than putting presents on a credit card and then paying them off gradually, with interest–but then, almost anything is. But most of us aren’t in the habit of saving up for things any more. If a Toys “R” Us program can push people in that direction, it’s hard to fault them for trying to make a little money while they do it. That’s their job, after all, they’re not in this for your financial health. And many people in their target market have limited or no access to bank accounts without minimum balances and checking fees–which makes the Bank of Toys “R” Us look like a better deal than, at least, a sock under the mattress.

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