Xmas Spending Boost

Get a wee boost to your Christmas budget and gain a year's interest in a day. With supermarket savings stamps you’re supposed to save up all year, then they add up to a 5% bonus. Yet to ease admin, most add this bonus on a set day/time of year, e.g., Morrisons add 3% in Nov/Dec 2009. So put cash in the day before and you STILL get the year’s bonus.

This is a step-by-step guide to all the different schemes, so push your store into donning a big white beard and shouting "ho, ho, ho" in order to boost your Christmas shopping budget.

• What are saving stamps?
• The loophole
• The specific schemes:
  • Wilkinson
  • Asda
  • Iceland
  • Morrisons
  • Tesco
  • Co-op
• Save throughout the year
• Discuss/other articles

What are savings stamps?

Savings stamps schemes are run by many supermarkets as well as a few other stores. The idea is simple and good: you squirrel away a little bit each month over the year to pay for a Christmas shopping spree, so it needn’t all come out of December’s income.

Some call them stamps, others savings clubs. They can be booklets or electronic cards and usually allow you to save between £20 & £500 worth. Schemes vary in how they operate; some only allow stamps to be redeemed at set points in the year while others'll let you spend at any time.

Best of all though, most supermarkets add a bonus on top of what you save, and this is usually paid out just before Christmas.

Don't think this is a gift...

Don't think of this as the generosity of the supermarkets. This is good business; think about it; you save for a year, they earn interest on your money, and eventually give you a little back. And more importantly....

You have to redeem the stamps at that specific supermarket; so they've effectively locked in your custom.

And as part of this, you'll be unsuprised there are some exclusions as to what you can buy with the stamps, usually including lottery tickets, petrol or goods from third party concessions; all the low profit margin goods.

It's also important to be aware that Iceland, Tesco, Morrisons and Wilkinson issue booklets where you're required to spend the entire amount saved in one transaction; if you don’t you lose the remainder. Therefore make sure you use them in one big shop, with all the Christmas stuff in, so you don’t get left in the lurch. Asda uses an electronic card which is much less rigid.

How safe are supermarket savings schemes?

It's important to understand they DO NOT have the same protection as savings in a bank (see the Safe Savings guide). In fact, this is exactly what happened with the Farepak debacle back in 2006. It's the reason I have always cautioned against savings clubs. This is why if you're planning to save up over a year, it's better to use the top Savings Account or Cash ISA, both of which are protected.

Yet as this technique's about having a small amount of cash in them for just a couple of days, the risk's reduced; the chance of a big supermarket going bust during that time is quite slim (though nothing is impossible). Keep your card safe though, as stores don't tend to keep a record of your savings (Asda's in the process of setting this up). If you lose it, your money's gone.

The loophole

Supermarkets tend to pay the bonus on a specific day, normally during November or December, and the interest earned only depends on how much is in there, not how long it’s been there. Therefore you can simply...

Buy all the stamps required the day before the bonus is paid, get the bonus, then use the funds to do your shop

As the shopping must then be bought in the specific supermarket, only do it if you would’ve spent there anyway. Luckily these days, it's easy to get both food and presents from these shopping monoliths, so it's not difficult to spend serious cash there.

The specific schemes

No two schemes are alike and some are more Scrooge than Santa. The following are the schemes in order of moolah bonus. Ensure you make a careful note of the timings.

Incorporating this into your year-long savings

The above may make you think "that's not a bad way to save for Christmas all year round!" yet actually, there’s a better strategy.

If you’re planning to save for NEXT Christmas, then make use of the Top Savings Accounts around to stash your cash into and read the Start Saving guide to decide what type of account will be most rewarding. Then, you’ll be earning consistent high interest, and can simply take the money out just before the redemption period, put it in the stamps scheme and earn more on top!

Earn cashback and find the cheapest deals too

For those wanting to save more on their shopping, it’s also worth having a Cashback Credit Card to use when crediting funds onto these saving schemes. Plus if you’re looking to buy bigger goods, the supermarket may not be the cheapest place compared to Cheap Online Shopping using Cashback Websites.