It's time to save for Christmas; do so and rather than the typical January groan of ‘I've no cash and can't take advantage of the cheap sales' you'll be quids in. Better still, there's a cunning way to ‘double-save' for Christmas 2008, potentially earning you up to 15% over the year!
Cheap Food Shopping, Cashback Credit Cards, Top 0% Cards, Cheap Online Shopping,
Festive Fivers, Loyalty Scheme Tricks, The MoneySaving Ways Of Christmas
Ensure Christmas 2008 is a merry one
Strangely, people always seem ‘surprised' by Christmas, as if it hid until winter then yelled, “Boo!” To avoid this seasonal spending shock, let me give you as big a warning as I can:
"On December 25th 2008 it'll be Christmas Day!"
The average spend on Christmas is reported to be around £600, but whatever you spend, it's always likely to be a stretch if it's paid purely from December's cash; even worse if it's whacked on a credit card, stretching debts into the New Year. Instead, simply putting aside the money each month over the year, (e.g. £600 is £50 a month) and it won't be such a hard hit on your pocket.
With forward thinking, and using the Budget Planner to plan the year's expenditure, you can get a head start for what's to come, and earn interest rather than pay it.
What if I'm already in debt from last Christmas?
It's crucial to break the cycle. The golden rule is pay off debts before saving (see the Should I Pay Off Debts With Savings? article). Plus, ensure your debts are as cheap as possible (see Best Balance Transfers, take all the right MoneySaving measures (there are countless articles on this site to do it) and ensure you're on the weekly email list so you don't miss out on urgent saving.
Yet the real key is self discipline. It may mean that this Christmas can't be as expensive as previously. Remember the key Christmas question isn't, 'I want to buy x, y and z this Christmas, what's the cheapest way?' but ‘what can I afford to spend on Christmas?' and then aim to have the best Christmas possible on that amount of cash.
So this year take a deep breath and accept Christmas can't be as costly, knowing that by doing this, future Christmas's should be better. Nearer Christmas time, there'll be lots of tips on how to save; it doesn't have to be as expensive as you think.
Wasn't Farepak Christmas saving?
Yes it was. It's very sad so many people lost out, though thankfully there were/are ways for some to get cash back (see Farepak Crisis Guide), and to be honest I've been saying not to use hamper schemes for a long time.
The real problem wasn't ‘saving for Christmas', it wasn't even the fact that hamper schemes aren't good value; it's that this type of saving doesn't have protection, unlike putting money in a savings account or cash ISA which is protected due to the Financial Services Compensation scheme (see the Safe Savings Accounts guide).
The Double-Saving loophole
In a nutshell, put your money in the best interest normal savings account you can for most of the year, then towards the end of the year, take the cash out and take advantage of a loophole in supermarket savings stamps schemes to get a big bonus on top.
- Step 1: Save in the best account until Autumn
Take the money you want to put aside for Christmas each month into the best easily accessible savings vehicle possible. A mini-cash ISA is the first place to try, as all it is, is simply a tax free savings account you can put up to £3,000 in per tax year (April to April). Read the Top Mini Cash ISA article to find the best.
The only reason not to use a Cash ISA is if your ISA allocation is already full up or is needed for share-based investments or longer term savings. In that case, simply utilise the Top Instant Access Saving Accounts instead.
- Step 2: Now boost your earnings with supermarket savings stamps.
By putting the money in a cash ISA or top savings account you’ve earned as much as possible until this point. Now comes the loophole to boost the gain. At the right moment, take the money and the interest out of your savings account and then use it to buy supermarket saving stamps; time it right and these will give a bonus boost to your money.
Using supermarket saving stamps
Many retailers promote Christmas savings stamp schemes where either electronic or real stamps are bought throughout the year to encourage saving for the eventual Christmas shopping spree.
Then, on a set date, usually around November, these retailers ‘generously' add a bonus, of around 4% on top of what you've saved. Purportedly, they do this to encourage savings; however it's actually a clever way to lock in your custom to that specific supermarket. After all, once you've bought the stamps you're stuck with them.
What's the loophole?
There's nothing stopping you using your savings to buy all the stamps the day before the bonus date, still receiving the full bonus on this cash, even though it's only been in there a day. It's worked for the last few years and means you're effectively earning a year's interest on the money, even though you've only had the stamps a day or so.
Which supermarkets can this be done in?
Most supermarkets and some other stores offer stamps, though the bonus varies. For Christmas 2007 Wilkinson's paid 5%, but a 4% bonus was paid at Asda, Iceland, Somerfield and Woolworths.
You must use those stamps in that supermarket though, so don't convert more money to stamps than you'll spend there. Having said that, these days you can buy a huge range of food, gifts and more in supermarkets not too expensively and there's nothing stopping you using a combination of stamp schemes to increase your choice of food, gifts and decorations.
Each scheme's bonus date will be in the free weekly MoneySaving e-mail
Is this guaranteed?
These schemes have allowed this to happen for years, but of course there's always a chance they'll change them. If that happens, the worst case scenario is you'll have saved your money in the savings account and earned as much as you can anyway.
As for the ‘Farepak question': while savings accounts are protected, saving stamps schemes aren't. Yet they're backed by the big supermarkets - who aren't that likely to go bust - and your money is only going to be with them for a few days at most.
Save £100 a month for Christmas in a standard, poorly paying, savings account, and you'd earn around £15 in interest. Instead, use this ‘double-save' technique and you'd earn a lot more interest, £40, and then get a bonus of up to £60 on top. This is equivalent to earning nearly 15% on your savings for those starting in January.
| Put £100 a month aside for Christmas | |||
|
Interest |
Bonus |
Total |
Standard Savings Account (1) |
Pays £15 |
N/A |
£15 |
Double Save System (2) |
Pays £40 |
£60 |
£100 |
(1) 2.5% interest (net) savings account (2) 6.1% paying cash ISA, then 5% Xmas bonus. |
|||
Supermarket savings tips are in the weekly MoneySaving e-mail
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