Saving for Christmas

It’s a good idea to save ahead for Christmas. Dedicated Christmas savings schemes can help you to avoid dipping into your cash too early and make sure you have enough money up-front to pay for gifts, food and drink. But there are other ways to save too.


Christmas clubs

Christmas clubs are one way to save for Christmas. Most schemes work in a similar way. You start saving early in the year and put aside a regular amount each month.

If you have more than one credit card, find out which card has the highest APR and focus on paying that card off first.

You can’t get at your money until a few weeks before Christmas when you should have built up enough savings to pay for the costs of Christmas, leaving you debt free in January.

With most schemes, you don’t usually get the cash to spend as you want. You may have to exchange your savings for shopping vouchers or gift cards at major retailers. With other schemes, you have to buy gifts, goods and services direct through the club.

Who offers Christmas clubs?

There are lots of Christmas clubs around. You can save through national retailers, local shops, social clubs, community groups, employers, The Post Office and Christmas club companies.

What are the benefits of joining a Christmas club?

  • There is no temptation to dip into your savings early. Your money is locked in until the release date, a few weeks before Christmas
  • You can save small amounts and you may prefer to save locally
  • Buying direct from the club or getting gift cards can take the stress out of Christmas shopping

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Money fitness tip

Only use a Christmas savings club for Christmas shopping. Your money won't earn interest so it's not suitable for saving for your goals. Remember savings are for life - not just for Christmas!

What to think about before you join a Christmas club

  • You don’t get any interest on your savings
  • You can’t get at your money during the year. Although this can be a benefit, if this is your only way of getting emergency cash, it may better to save in other ways
  • You are tied to buying through certain retailers. Or you may only be able to buy the gifts and services offered by the club
  • You can’t take advantage of savings or deals that may come up during the year because your money is locked away

Are Christmas savings clubs safe and secure?

Christmas savings clubs and schemes are not regulated by the Financial Conduct Authority. That means you can’t take complaints to the Financial Ombudsman Service, nor can you get money from the Financial Services Compensation Scheme if your Christmas savings provider goes bust.

Some Christmas savings clubs are members of the Christmas Prepayment Association (CPA). They have developed a code of practice for the industry. This includes rules about how their members must look after your money once you’ve handed it over and how they must advertise their schemes to make sure they are not misleading. They also offer a conciliation service if you have a complaint about one of their members. Before you join a Christmas club, it’s worth checking that it’s a member of the CPA so that you will have some protection if things go wrong.

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Other ways to save for Christmas

Christmas clubs aren’t the only way to save for Christmas. It’s a good idea to compare what Christmas clubs offer with:

Money fitness tip

You can save directly from your payroll into a credit union savings account via JoiningForces, which is especially for the Armed Forces.

  • Credit unions
  • Bank and building savings accounts
  • Cash ISAs
  • Supermarket savings schemes

Credit unions

You could consider saving through a credit union. There may be a branch in your local community or your employer or Trade Union might offer one.

Some credit unions offer Christmas club savings schemes that work in the same way as other Christmas clubs. You start to save regular amounts early in the year and your money is locked away until a few weeks before Christmas.

What are the benefits of joining a credit union Christmas club?

  • You should earn money on your savings with a dividend that rewards you for being a loyal saver
  • Your savings are protected by the Financial Services Compensation Scheme, so you’d get your money back if the club went bust
  • You may be able to take out a credit union loan at a reasonable interest rate if you face an unexpected purchase or a financial emergency and keep your Christmas savings safe
  • You are free to spend the money on what you want so you can take advantage of seasonal discounts and deals

What to think about before you join a credit union

  • There may not be a credit union near to where you live or work
  • You may have to prove your local connection to the credit union to become a member

Find out how you can save with a credit union. fitness tip

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Bank and building society savings accounts

If you save for Christmas in a bank or building society savings account, your savings will earn interest and your money is protected by the Financial Services Compensation Scheme.

There are lots of different savings accounts on offer, so it’s worth doing some research to find out what works best for you.

What to think about before you open a savings account

  • Most savings accounts offer interest but you need to compare rates to get the best deal
  • Only choose an instant or easy access account if you’re not tempted to dip into your cash before Christmas
  • Regular savings accounts may offer a better rate of interest. However, you may have to lock in your money for a year and commit to saving a minimum fixed sum each month
  • You’ll need to check how much notice you have to give before you can get at your money
  • A few building societies offer dedicated Christmas savings accounts. You can only open them early in the year and you can’t get at your money until a few weeks before Christmas. You should always compare the interest rates on a Christmas savings account with other types of savings account

Find out how you can save with a savings account.

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Cash ISAs

Cash ISAs are also worth considering if you’re saving for Christmas or another big event. You will be paid interest and all the money you earn on an ISA is tax free.

What to think about before you take out a cash ISA

  • There is a limit to the amount of money you can put in each tax year, which runs from April to April. However, this limit is generous and should easily cover the costs of Christmas and leave you with money to spare
  • If you put in the maximum amount that you’re allowed to and then take money out to pay for Christmas, check that you can replace what you’ve taken out before the end of the tax year. From autumn 2015, you can take money out of your ISA and deposit it back within the same tax year without it affecting your annual ISA allowance limit if it is a Flexible ISA.
  • There are instant access and fixed term ISAs. If you choose a fixed term ISA, you lock your money away for a set amount of time. Make sure you can get your money out when you need it or you may be charged a penalty for drawing it out early

Find out how you can save with a Cash ISA.

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Supermarket savings schemes

Many supermarkets offer Christmas savings schemes. Some allow you to save throughout the year using a saver card and offer extra bonuses if you top up the card with certain amounts. Before Christmas, you can start to spend the money you’ve saved on the card.

Other schemes start in the weeks leading up to Christmas. You have to collect coupons when you do your weekly shop. You’ll need to collect all the coupons to qualify for discount vouchers, which you can use to pay for your Christmas shopping.

What to think about before you join a supermarket savings scheme

  • Some of the bonuses offered could be better than the interest rates you might get in a savings account
  • You may be able to take out more than one saver card and take advantage of multiple bonuses
  • You are limited to shopping with the store you’ve been saving with and you might struggle to find everything you want to buy
  • You might save more money by shopping around for better deals in other stores

Christmas savings action plan

  • Start saving early in the year to build up your savings. Some schemes won’t let you join after a certain date
  • If you might be tempted to spend your money during the year, look for an account that will lock your money away until you need it
  • Always compare savings accounts that earn interest to make sure you’re getting the best deal
  • If you use a notice savings account, check you’ll be able to get your money out in time for Christmas. If you don’t give enough notice, you may be charged a penalty
  • If you save cash you’ll have more freedom to get the big discounts retailers offer on Pre-Christmas sales days such as Black Friday or Cyber Monday
  • If you choose to save with a Christmas club check it is a member of the Christmas Prepayment Association 
  • Use our Christmas GoalSaver to see how much Christmas might cost you so you can plan, budget and stay MoneyFit.

Last reviewed: 31/05/2017

This content has been provided by the Money Advice Service