Are Christmas savings schemes worth it?

Mouthy Money Your Questions Answered panelist, Anna Bowes, answers a reader’s question on how Christmas savings schemes work and what the alternatives are.

Q Do savings schemes for Christmas still exist and are they any good or should I pick a regular savings account instead?

A Accounts that are specifically designed to mature just before Christmas may seem like a good idea and in truth can be useful as long as they offer a decent interest rate.

However, currently there aren’t any Christmas-branded accounts that are available to open, that we are aware of, but that may be because we are closing in on Christmas once again, so it’s not an ideal time to start a regular savings account.

But regular savings accounts are useful for getting you into the savings habit. So, if you are looking to put some money away every month, perhaps just after you’ve been paid, a regular savings account could be just what you are looking for, even if it is not   a Christmas account.

These accounts help to get you in the savings habit as they often require you to make a minimum deposit each month but may restrict the access, so it’s important to read the terms and conditions thoroughly.

You may not be able to access the money for the first 12 months, for example, so an account with these restrictions wouldn’t work if you need to withdraw the money in December.

Virgin Money has recently released a Regular Saver Exclusive Account paying 10.38% AER, but as the name suggests, you need to have or open a current account with Virgin Money or its parent company Yorkshire Bank.

However, if you do qualify, this is the best paying account on the market. You can pay up to £250 into the account each month, but you can vary the amount you save and better still, you can have access at any time, so it would be appropriate for saving for this Christmas.

As I inferred, regular savings accounts come with lots of terms and conditions and the best rates often require you to have a current account with that provider. If these don’t seem to be the right fit, you can open a more flexible easy access account, but the rates are not nearly as high.

Whatever you choose, while you should always go for the highest rate, anything you can put away will make all the difference.

Anna is the co-founder of the website Savings Champion. She has worked in the financial services industry for more than 30 years and for most of that time has been helping people to make the most of their savings. Anna started her career with Chase de Vere, in its innovative Moneyline department, a free savings information service that became as popular with personal finance journalists as it was with savers. Anna believes passionately that savings advice is a neglected part of the financial services sector and that the needs of savers are largely ignored by the savings product providers and the government. Anna is a regular contributor to the BBC’s Money Box, Breakfast and News programs, as well as the national press, providing expert analysis and commentary on the UK savings market.

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