Christmas Savings Clubs – are they worth it?
With the New Year only just underway, thoughts are already turning to the next festive season. Adverts are appearing proclaiming that you can make Christmas 2017 the best one ever, if you join a Christmas Savings Club
Park, once one of the biggest names in the Christmas Hamper industry have shifted their focus away from providing groceries and frozen food. Now they are focusing on the voucher market, rather than the hassle of making up all those pesky hampers on which they charge a hefty premium.
Whilst Park do still provide a limited number of hampers and gifts, some Christmas savings clubs offer only vouchers as a reward for saving with them throughout the year. Variety Christmas Savings Club have been in business over 35 years yet only offer a limited number of High Street vouchers. These do however include big names such as Love2Shop, Amazon, Argos, Boots, Marks and Spencers, Tesco and Sainsburys.
Even so around a million people still use christmas savings clubs to put a little aside each week for the biggest day of the year. But do they represent good value for money?
Benefits of Christmas Savings Clubs
You can put a little aside each week to budget over the year
There is no temptation to dip into your savings
You know in advance what you will be getting
Agents can earn commission on sales.
Disadvantages of Christmas Savings Clubs
They are very restrictive and inflexible
You can get much better rates of interest and deals elsewhere
If your agent does not pay the company you might lose your savings
They do not represent very good value for money. Hamper companies for example place an average of 20% mark up on all their products. Supermarkets often offer the same products with considerable savings at Christmas time.
You do not receive any bonus or interest on your money. Vouchers are often only for face value yet the company has been earning interest on your money all year round.
What alternatives are there for Christmas Savings Clubs??
Banks and Building Society Accounts
You can put a little aside each week and earn a small amount of interest making your money go further. If you are tempted to withdraw the money you could ask a friend or relative to look after your bank card or building society book. A notice account will pay more interest than a standard savings account. Because you have to give notice before you can withdraw money, this will stop you dipping in to your savings.
Some banks have a “round up” service which will round each transaction you make up to the nearest pound and pay the pence into a savings account. You hardly miss the pennies but see how much starts to build up in your savings account!
Some credit unions provide Christmas Savings Clubs but also pay interest on your savings. You will not be able to access your money until December, but because credit unions are protected under the Financial Service Compensation Scheme your money will be safe all year round. Check to see if there is a credit union near you who offers such a scheme.
Supermarket Savings Schemes
Many supermarkets run their own savings schemes where by you either buy savings stamps or put some money aside each week to pay for your Christmas Shop. Many of these also offer some form of bonus if you fill up your card with stamps or save a certain amount. Even putting away one pound each week which is an amount most people wouldn’t miss would pay for Christmas dinner. The disadvantage to supermarket savings is of course you must spend the savings in their shop.
Becoming a Christmas Savings Club Agent
Whilst becoming an agent for a savings club or hamper company may seem like a good idea beware. There is usually a minimum order value required before you can earn any commission.
For Park Hampers in 2017 – you will not earn any commission on orders under £550 and from there upwards your commission could be as little as 1% depending on the product you sell. Variety Savings Club has a minimum of £1500 and from there upwards your commission is a maximum of 4%.
Not a lot of reward it seems for the hassle of finding customers, collecting and banking money and managing your agency
If you are thinking of saving for Christmas 2017, we would recommend opening a separate savings account which pays interest. You can pay in as much or as little as you like, your money will be safe and you may even earn a small amount of interest on the money you put aside.