With 25 December exactly four months away, Asda has launched a Christmas Savings Card to boost your festive spending – but there are drawbacks to consider.
Christmas can put a strain on your budget, with the Bank of England estimating we typically spend £500 more in December than we would in other months, largely on food, drinks and gifts.
Asda’s scheme offers shoppers a way to spread the cost of Christmas by putting away a little on their Christmas Savings Card each time they visit a store. This year, the supermarket is paying its biggest ever bonus of 5.4%, more than three times the rate on the best easy-access savings account (1.5% AER).
Here we take a closer look at how much you can earn through the scheme, how it compares with savings, and the risks to consider before jumping in.
How much can you earn?
The Asda Christmas Savings Card offers a bonus depending on how much you manage to save by 5pm on 17 November 2019.
The table below shows how much of a bonus you could secure when saving between £30 and £280.
The maximum you can save on the card is £485. However, you only need to put away £280 to earn the top bonus of £15, which is effectively a 5.4% boost to your balance.
The bonus will be applied to your card by 18 November 2019 and you’ll be able to spend the money in-store or online at Asda.com or George.com.
The balance will stay valid for two years from your last transaction.
You can pick up a Christmas saver card in Asda stores and top up the account at a customer service desk or at the till or self-service checkout.
Find out more: read our guide on how to plan a budget to find out where you can make savings to put towards the cost of Christmas.
Supermarket Christmas savings schemes compared
Asda isn’t the only supermarket offering a way to build up a pot of money for the festive season.
Tesco offers Clubcard members the chance to earn up to £12 – or 6% – on the cash they put away with its Christmas Saver scheme. Shoppers can add money to their account in-store, at a customer service desk or at the till by 15 October. The vouchers are valid for two years.
Morrisons offers a Christmas Saver scheme to its More loyalty scheme customers. It allows shoppers to buy £1 digital stamps throughout the year, with the deadline for building up a Christmas pot falling on 30 October. The vouchers can then be spent between 6 November and 31 December.
Iceland and the Co-op offer savings schemes that aren’t tied to Christmas.
With the Iceland Bonus Card you can get £1 for every £20 you save, equivalent to a 5% bonus. The £1 bonus is applied within 48 hours after you hit each £20 threshold.
The Co-op offers a paper savings stamp card, where you can buy 48 stamps worth £1 that can be used throughout the year. During December, you’ll get a £2 bonus on each completed book, equal to a 4% bonus.
What are the drawbacks?
Supermarket savings can help you build up a reserve of money to ease the burden of Christmas, but there are drawbacks.
The biggest one is that the money you save with these schemes is not protected by the Financial Services Compensation Scheme (FSCS).
This means that if Asda or the other supermarkets go bust, you would lose the money you have squirrelled away. While this sounds unlikely, it has happened before.
In 2006, Christmas savings club Farepak went under, leaving 100,000 customers who had saved an average of £400 with nothing.
The other drawback of saving with a supermarket scheme is that you must spend the money at that retailer, preventing you from shopping around for a better deal.
- Find out more: FSCS savings protection explained
How to save for Christmas
Saving for Christmas throughout the year is a great idea, but you don’t have to do it via a supermarket.
A regular savings account allows you to set aside money each month, with some of the best deals paying 5% AER.
With a savings account or bank account, your money is protected by the FSCS. This guarantees that you’ll be protected for deposits up to £85,000 in the event that the provider goes under.
With four paycheques until December, time is running out to set aside the money you need. These seven budgeting apps could help you find wiggle room in your budget to ramp up your savings.
- Find out more: you can compare savings accounts for Christmas using Which? Money Compare