Five ways to save for Christmas

Don't rely on a holiday miracle to help you pay for presents in 2021.

No matter how far away Christmas may be, saving up for the festive period can help you prepare for what’s an often-expensive time. It’s also much better for your finances than relying on interest-accruing credit cards to buy presents. Here’s our guide to the best ways to save for Christmas.

1. Regular savings account

Putting money into a regular savings account is a great way to set aside money and earn a bit of interest for your Christmas spending.

You’ll pay money into the account for a set period of time and usually won’t be allowed to withdraw any of the funds that you’ve saved (although some providers might let you make a very limited number of withdrawals over a certain timeframe). If you find it difficult to leave your money alone, you’ll like that access isn’t easy before the term is up.

Many banks offer one-year savings accounts, so if you plan ahead and open one in early to mid-December then you’ll be able to access all the money that has accrued over the year just in time for the following Christmas.

2. High-interest savings account

If you don’t need a penalty to motivate you to keep your hands off your savings, you could open a high-interest savings account just to save for Christmas. You’ll earn a higher APY, plus you’ll be able to withdraw funds at any time throughout the year.

Just be aware that some high-interest savings accounts only pay interest if your balance is above a certain threshold. Know that amount and monitor your balance so that your money is always earning interest.

3. Savings with sub-accounts

If you don’t like the idea of having to manage multiple savings accounts, look for one that offers sub-accounts. They’re particularly useful if you want to save money towards a goal – like Christmas – as you can just move money there whenever you like.

Some of the challenger banks let you split your money into different savings buckets (like digital piggy banks), so you can track and manage multiple savings goals all in one place.

For example, Starling Bank’s Goals feature lets you set your goal and then squirrel cash away either manually or automatically, encouraging you to save more. You’ll also earn interest on whatever you put away.

Monzo’s Pots feature lets you transfer money in and out instantly – but you won’t get any interest on your balance with these. To earn interest on savings with Monzo, you can use its Savings Marketplace. This lets you compare different savings deals with Monzo’s partnership providers and open an account directly from the Monzo app. You can see the account balance and weekly interest in the app and set up a standing order to fund it regularly.

4. Round-up savings

Many banks now offer automated savings features, where you can round up your daily transactions to the nearest £1, and send that loose change directly to your savings account.

For example, if you used your debit card to buy a book for £7.50, it would round-up the value to an even £9 and send the extra 50p to your savings account. Or you could choose to have your transactions rounded up to the nearest £5 amount, which in this case would round the purchase up to £10 and put the extra £2.50 into your savings.

It might seem like a small amount, but make a few purchases a day and this could add up to a lot of money in time for Christmas. Plus, if the extra change from your transactions are being added to a high-interest savings account, you’ll also earn interest on that money.

There are also round-up apps, like Chip. Download Chip, connect it to your current account and, using artificial intelligence, it will work out how much you can afford to save. It then moves small amounts of money from your current account into a Chip account at regular intervals of your choice.

5. Set a Christmas budget

Decide how much you want to save for Christmas each month to and write it into your budget – or have it transferred directly to your savings account as soon as you’ve been paid.

Having a proper budget in place has many advantages:

  • It shows you exactly how much you’re spending and what you are buying.
  • It lets you plan your spending and expenses so you’ll buy fewer things you don’t need.
  • It puts you in control of your finances, as you know when and how much you’re spending and what you’re spending it on.
  • It makes saving easier, as listing everything you spend gives you ways to cut back and reach your financial goals.

If budgeting isn’t your strong suit, tools like Meet Cleo could help.

How to maximise your Christmas savings

Four or five months in, think about how you can build an even bigger festive fund:

  • Make extra deposits. Think about making additional contributions to your savings account if you ever come into some extra cash.
  • Review your deposit amount. Consider whether you can save even more as the year goes on– for example, could you afford to push your monthly deposit from £75 to £100?
  • Can you switch? The savings account you chose months ago might have offered the best interest rate back then, but maybe another bank has a much better savings deal now. If you are allowed to change accounts without being penalised, then compare your options and switch to a better deal.

Bottom line

Setting aside money throughout the year to save for Christmas can help take the stress out of the festive season, and prevent you from racking up credit card debt. Compare your options for savings accounts and start planning early.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Compare the best business credit cards of 2021

    Saving time on expense reports and streamlining your cash flow are just a couple of the many perks you could enjoy with a business credit card. Compare interest rates and check your eligibility today.

  • Zumo review 2021

    Zumo lets you buy, sell, manage and spend your crypto via its wallet app and Visa debit card.

  • Emergency fund: What it is and how to build one

    This type of savings account can save you from a lot of financial stress and anxiety.

  • Ziglu review 2021

    One of a small number of FCA-registered cryptoasset firms, Ziglu is a slick app to exchange cryptocurrencies and a louder-than-loud debit card.

  • How to make NFTs

    Find out all you need to create your own NFTs – the new application of blockchain technology that enables digital ownership of assets.

  • Best stocks and shares ISA in the UK

    We’ve reviewed the best stocks and shares ISA in the UK and explained who they’re best suited to, with pros and cons.

  • Best stocks and shares ISA in the UK

    We’ve reviewed the best stocks and shares ISA in the UK and explained who they’re best suited to, with pros and cons.

  • What is capital gains tax?

    Want to know what capital gains tax is, how it works and when you need to pay it? Read our comprehensive guide on what you need to know about capital gains tax including what your CGT allowance is for the 2021/2022 tax year.

  • Kia Sedona insurance group

    Find out which insurance group the Kia Sedona falls under and how much it costs to insure.

  • Compare the best business bank accounts for ecommerce

    Discover how opening a business bank account could benefit your e-commerce business.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site