You'll be locked in to spending with one retailer

Don’t think of the bonus as a gift – it isn't the supermarkets being generous, it's good business acumen. You save for a year, they earn interest on your money, and eventually give you a little back. And more importantly: You must spend the cash at that specific retailer, so they effectively lock in your custom. You won't be surprised to hear there are some exclusions on what you can buy with the stamps - you can't usually spend them on lottery tickets, petrol or goods from third party concessions (when a retailer has a space in a larger department store). Some supermarkets also don't allow you to redeem them online.

You DON’T get the normal savings protection...

It's important to understand these schemes DO NOT have the same protection as savings in a bank (supermarket bank savings do though, eg, Tesco Bank – see the Safe Savings guide for more). In fact, this is exactly what happened with the Farepak debacle back in 2006. It's the reason we've always cautioned against savings clubs. If saving for Christmas over the year – a fantastic aim – save in the bank (see Top Savings Accounts and Top Cash ISAs ). Then, withdraw the cash and buy savings stamps the day before the bonus date to bag double interest – more on this below.

...But you can use a loophole to minimise the risk

Supermarkets tend to pay the bonus on a specific day or month, normally during November or December. The bonus earned only depends on how much is in there, not how long it's been there. Therefore, you can simply... Buy all the stamps/credit required just before the bonus date, get the full bonus, then use the funds to shop. As this technique's about keeping a small sum of cash on the cards for just a couple of days, the risk's reduced. The chance of a big supermarket going bust in that time is pretty slim, though nothing's impossible. Remember, the cash must be spent at that specific store, so only do it if you would've spent there anyway. Keep your card safe, as many don't keep a record of your savings, unless it's an online scheme. So lose it, and your money's gone.

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Supermarket Xmas Boost

Supermarket Xmas Boost

Earn years of interest (up to 6%) in a day

Jenny Keefe | Edited by Steve Nowottny

Updated 6 August 2020

Many supermarkets urge you to save for up to 6% bonuses in their (not UK-protected) savings schemes year-round. Yet it's possible to bag a year's interest in a day. We've a full rundown of schemes from Tesco, Asda, Iceland and more, plus everything you need to know.

Our top picks

Christmas 2020 schemes, incl

In this guide

What are supermarket savings schemes?
Supermarket savings need-to-knows

What are supermarket savings schemes?

Supermarket savings stamp schemes encourage year-long saving for Christmas, yet a loophole allows you to get the year's bonus in just one day.

Most supermarkets pay out the bonus based on how much you’ve saved by a specific day or month, so dunk the cash in just before and they’ll add up to 6% on top. Unlike normal savings accounts, you're paid a bonus based on the total amount saved on the bonus day.

The savings themselves come in the form of booklets or electronic cards which you can top up a little at a time. Some supermarkets only allow stamps to be redeemed at set points in the year, while others will let you spend at any time.

Three supermarket savings need-to-knows

To help you make the most of a supermarket savings scheme, it's worth getting your head around the following need-to-knows...

1. You'll be locked in to spending with one retailer

Don’t think of the bonus as a gift – it isn't the supermarkets being generous, it's good business acumen. You save for a year, they earn interest on your money, and eventually give you a little back. And more importantly:

You must spend the cash at that specific retailer, so they effectively lock in your custom.

You won't be surprised to hear there are some exclusions on what you can buy with the stamps - you can't usually spend them on lottery tickets, petrol or goods from third party concessions (when a retailer has a space in a larger department store). Some supermarkets also don't allow you to redeem them online.
2. You DON’T get the normal savings protection...

It's important to understand these schemes DO NOT have the same protection as savings in a bank (supermarket bank savings do though, eg, Tesco Bank – see the Safe Savings guide for more). In fact, this is exactly what happened with the Farepak debacle back in 2006. It's the reason we've always cautioned against savings clubs.

If saving for Christmas over the year – a fantastic aim – save in the bank (see Top Savings Accounts and Top Cash ISAs). Then, withdraw the cash and buy savings stamps the day before the bonus date to bag double interest – more on this below.
3. ...But you can use a loophole to minimise the risk

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

Buy all the stamps/credit required just before the bonus date, get the full bonus, then use the funds to shop.

As this technique's about keeping a small sum of cash on the cards for just a couple of days, the risk's reduced. The chance of a big supermarket going bust in that time is pretty slim, though nothing's impossible.

Remember, the cash must be spent at that specific store, so only do it if you would've spent there anyway. Keep your card safe, as many don't keep a record of your savings, unless it's an online scheme. So lose it, and your money's gone.

Top Christmas 2020 schemes

No two schemes are alike, and some are simpler than others. Whichever you go for, ensure you make a careful note of the timings.

Supermarket	Max bonus value (i)	To get bonus, pay in by	Bonus paid	Type
Tesco How it works	6%	20 Oct 2020	November 2020	Electronic
Asda How it works	5.35%	5pm on 15 Nov 2020	Shortly after 15 Nov 2020	Electronic
Iceland How it works	5%	Any time	Within 48 hours	Electronic
Co-op How it works	4%	Any time	December 2020	Paper
Morrisons How it works	3%	31 Oct 2020	31 Oct 2020 (ii)	Electronic

(i) As a percentage of the amount paid in. (ii) To be used between 6 Nov - 31 Dec 2020.

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Supermarket Xmas Boost

Earn years of interest (up to 6%) in a day

Our top picks

In this guide

What are supermarket savings schemes?

Three supermarket savings need-to-knows

1. You'll be locked in to spending with one retailer

2. You DON’T get the normal savings protection...

3. ...But you can use a loophole to minimise the risk

Top Christmas 2020 schemes

SPOTTED OUT OF DATE INFO/BROKEN LINKS? EMAIL: BROKENLINK@MONEYSAVINGEXPERT.COM

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