It makes sense that someone would dig deep back into a depression-era program to explore ways to get people spending again. Kmart and Sears have done just that by introducing a “Christmas Club” card that is like the old holiday savings programs banks sponsored.
The Kmart-Sears card allows you to save some money each week that builds toward that budget you’ve decided to set aside for holiday shopping. It’s a smart idea to budget this way. If you want to spend $500 over the holidays, it’s easier to set aside $41 a week than to take down the lump sum.
But here’s the rub.
You basically have to say “yes” to the three ‘ares’:
-Are you planning to buy gifts this holiday?
-Are you willling to do so at only Sears or Kmart stores?
-Are you willing to tie up some money for the next three months?
Sears and Kmart will compensate you for that last question. And it’s actually at a pretty good rate. They will pay you up to 3% of the valaue you have on their card as of Nov. 14, when the program ends.
Back in the day, 3% sounded very low. But consider this – The Treasury sold three-month bills today that yield 0.160%. Three-month certificates of deposit go for around 0.3%. Granted, those first two are government backed (CDs that are FDIC insured, that is). But if you aren’t worried about Sears or Kmart being around in three months, might be a good deal.
There is a catch – you can only earn up to $100 interest, which translates into $3,333 on the card. But that goes back to question 2 – how much will you spend over the holidays at Sears-Kmart.