Countdown to Christmas...and count up your savings!

You might think it’s too early to mention the C-word. But supermarkets are already advertising their festive menus and savings schemes. There’s no getting away from it: Christmas is coming!

The average family in the UK spends around £800 on Christmas. That can be especially stressful when you’re living on a tight DMP budget. But it pays to plan ahead! Start setting aside whatever you can each week or month now from your DMP budget. You’ll soon have a small savings pot that you can use in December or January to help meet the added cost of Christmas.

When you’re making every penny count, it’s even more important to make the most of the money you manage to put aside. So are those supermarket savings schemes worth it? Are there better ways to save up for Christmas? Let’s take a closer look...

Supermarket savings schemes

What are they?

You can find Christmas savings schemes at a number of supermarkets including Asda, Co-op, Morrisons, Iceland and Tesco. Some schemes run all year round, allowing you to save using a saver card. Others involve collecting coupons in the weeks before Christmas in order to qualify for money-off vouchers for your Christmas shop.

The pros

Most supermarket schemes pay bonuses for saving a certain amount. These are often better than the interest rates you’d get if you put the same amount in a savings account. You could even collect multiple bonuses by taking out several saver cards.

Unlike normal savings accounts, most supermarkets pay out the bonus based on the total amount you’ve saved by a specific day. So you can get the bonus by simply paying into the scheme just before the relevant date. That way, you’ll avoid the risks...

The cons

Supermarket savings schemes are not protected by the FSCS, in the same way as bank savings are. This means your savings are not guaranteed if a company goes bust. (This does not apply to savings in a supermarket bank, like Tesco Bank.)

Aside from this, the main drawback of saving in this way is that you have to spend your savings at the shop where you saved them. And there are usually some exclusions on what you buy and how you buy it. For example, some supermarkets won’t let you redeem the vouchers online.

Christmas clubs

What are they?

Christmas clubs are schemes you pay cash into all year round. They’re similar to supermarket savings schemes, but not necessarily tied to a specific supermarket. During the first couple of months of the year you choose what you’re going to buy, then start paying in every month. Closer to Christmas, the money you’ve saved can be exchanged for gift cards or vouchers, or used to buy items, such as toys or Christmas hampers, directly through the Christmas club. You usually can’t just get back the cash you’ve saved up.

Some of the most well-known Christmas clubs include Park Christmas Savings, Variety Christmas Savings Club, the Post Office and Intu Shopping Centres. Hundreds of thousands of people take part every year. There are also smaller, more local schemes offered by employers, retailers, community organisations and so on.

The pros

These schemes can help you get into the habit of saving and to pay for Christmas in advance. You won’t be able to chip away at your savings during the year. And you’re less likely to find yourself in debt in January.

It’s possible to make quite small regular payments through some clubs, which is helpful when you’re on a tight budget. Some schemes also offer a variety of ways to pay, from direct debit to Paypoint.

Finally, buying through a club and planning your purchases in advance can help make Christmas shopping a little easier at the end of the year.

The cons

Christmas clubs don't pay interest on your savings. The gift cards or other items you get at the end of the year are usually the same value as what you've put in.

You don’t have a lot of choice on how to spend your money. You’ll have to buy through the club, or from specific retailers. That means you can’t take advantage of deals from other retailers. Plus there are inherent limitations in having to shop with gift cards. They have expiry dates – and you have to be careful not to lose them!

One of the main advantages of Christmas clubs is the fact that you can’t access your cash until Christmas. But if you have a financial emergency, this can quickly become a major drawback. So what happens if you change your mind, and want to take your money out of a Christmas club? You usually can – but the cancellation charges can be significant.

Like supermarket savings schemes, Christmas clubs are not regulated by the FCA (Financial Conduct Authority). So you can’t make a complaint about a Christmas club to the Financial Ombudsman Service. And - crucially - you can’t claim your money through the Financial Services Compensation Scheme if the Christmas club goes bust. This famously happened to Farepak in 2006. 100,000 customers had saved an average of £400 each with Farepak and it took them six years to get only around half their money back.

Some of the bigger Christmas clubs now belong to a voluntary association called the Christmas Prepayment Association (CPA). These clubs protect your money by keeping it in a trust, with some independent trustees. This still doesn’t guarantee that you’d get all your money back. But it’s still worth opting for a CPA scheme for more peace of mind. You can check which Christmas clubs belong to the CPA on the Christmas Prepayment Association website.

Credit union Christmas clubs

What are they?

Credit unions offer an alternative to traditional banks and building societies for saving and borrowing. You usually have to have some kind of connection with a credit union in order to be able to join. For example, you might need to live in a certain area, work for a certain employer, or belong to a certain trade union. You can check for credit unions you’re eligible to join at findyourcreditunion.co.uk.

The pros

In a credit union scheme your savings will be protected by the Financial Services Compensation Scheme. And when Christmas comes round you can get at your savings in the form of actual money, to spend on whatever you want. You should also earn money on your savings, in the form of a dividend.

The cons

The customer service provided by different credit unions can vary a lot. So they may not be as flexible as other schemes in terms of how you pay your money in, for example.

Other ways to save

Other ways to save for Christmas include

  • - a Christmas savings account with a building society
  • - any other savings account with any bank or building society
  • - a cash ISA.

With all of these options, your savings will earn some interest and will be protected by the FSCS.

When choosing an account it’s best to weigh up the benefits of being able to access your money if you need it. If it’s your only savings pot, it might be too risky to put it in an account you won’t be able to access until Christmas. The same applies to fixed-term ISAs.


Wherever you choose to put your Christmas savings, the most important thing is to make sure your money is protected. The second most important thing is that you’re getting into the habit of saving! Spreading the cost of Christmas over the year (or a few months if you start now) is the best way to make sure you don’t end up out of pocket, missing bills or trying to borrow more during December or January. If you do find yourself struggling, please get in touch and we’ll do what we can to help.

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