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Christmas savings accounts: naughty or nice?

We compare interest rates on Christmas accounts

If the Christmas shopping is taking its toll on your wallet, why not make it your New Year’s resolution to budget for next year by putting aside a certain amount on a regular basis?

A number of providers offer special Christmas savings accounts to help you to prepare financially for the festive season. We take a look at what’s available and sort the crackers from the turkeys.

Limited withdrawals

The Christmas Saver (Issue 2) from Monmouthshire Building Society lets you save between £1 and £1,000 each month and offers a variable interest rate of 2.25%, including a bonus rate of 1%. During November and December you can make any number of withdrawals without notice, but a withdrawal at any other time of the year must be to close the account.

However, you can find more generous savings accounts on the market which don’t restrict your access. Both Marks & Spencer and the Post Office pay 2.35% on their instant access accounts, and you can make as many withdrawals as you like.

Fixed rate or variable?

With a rate of 2.75%, including a 1% bonus, Yorkshire Building Society’s Christmas Regular Saver pays more than all these accounts and has the benefit of being fixed rather than variable. You can deposit between £10 and £80 a month until the end of November 2013, but only one withdrawal is allowed without losing the bonus. Saving the maximum amount each month would generate a gross interest of £14.32 at the end of the 12 month period.

If you’re happy to leave your money untouched for the whole year, the Principality Building Society’s Christmas Regular Saver Bond offers a higher fixed rate of 3.50%. You can pay in between £20 and £500 each month.

Regular savings accounts

You can find a better deal by looking for savings accounts that aren’t specifically designed to help budget for Christmas. The regular savings account from Saffron Building Society, for example, pays 4.00% and offers unlimited withdrawals, but this is only available to existing members and their families.

Norwich & Peterborough also offers a regular savings account paying 4.00% which is open to anyone, but it only allows one withdrawal per year.

Which? Verdict

Christmas savings accounts are a great way of spreading costs during the festive period, and most pay a higher rate of interest than the best-paying instant access accounts. However, many are beaten by ordinary regular savings accounts, which operate in a very similar way, so it pays to research your options before deciding where to put your money.

More on this…

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  • Are my savings safe? – check what protection your savings have if your bank goes bust
  • Who are the most popular savings providers? – see our latest customer satisfaction scores
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