Sears and Kmart Christmas Club Card Program

A new layaway-style program unveiled in August 2009 lets Sears and Kmart customers put money away toward holiday gifts via a Christmas Club style card. It’s a reversal of the more-recent consumer strategy of buying first and paying later, and thus mimics the layaway philosophy.

Shoppers add money to the Christmas Club card during a set period of time and Sears and/or Kmart will pay 3 percent in “rewards” up to a $100 maximum based on the value on the card. Shoppers have until Nov. 14 to add money to the card. (update: in 2010, activate by Oct. 31, add money till Nov. 14) Value can be added at the store or online at Sears.com/christmasclub or Kmart.com/christmasclub. Users can also check their card balance online.

Cards must be activated by Oct. 31 to qualify for the rewards program. The stores’ Web sites offer a breakdown of how a user’s holiday budget will play out. For example, someone who adds $20 per week to the card starting on Aug. 30 would realize a holiday budget of $200 by Nov. 14.

The 3 percent reward is calculated based on the card’s value on Nov. 14, 2009 and the value will be added by Nov. 25 (Nov. 24 in 2010), according to the stores’ Web sites. The card functions as a gift card and thus is not refundable. It also can’t be used to purchase debit cards or third-party prepaid cards.

The process is reminiscent of the targeted savings, or Christmas Club, accounts that many people had at banks, putting a set amount aside year-around and then using the accumulated balance to buy gifts at Christmas time. Christmas Clubs faded away in recent decades with the rise in popularity of credit cards and other forms of revolving debt. Now, with consumers keeping a close eye on the economy, facing layoffs and seeing credit lines slashed or interest rates, programs such as layaway are being resurrected.

Sears and Kmart leadership at Sears Holding Corp. says the program is intended to make consumers less dependent on credit cards this holiday season. It’s the latest move for the company that brought back its layaway program in late 2008 after 20 years.

Some people are interpreting the stores’ FAQ that says “it only costs $5 to activate your card” as a fee, but it appears that’s just the minimum you can put on the card initially. Double-check with your store.

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