Christmas savings clubs: are they still worth it?

Christmas savings clubs typically work by allowing you to deposit money throughout the year — often by regular monthly or weekly contributions — and receiving your total balance in a lump sum, typically in October or November, ready for Christmas shopping. Some schemes run through retailers (such as the now-closed Save the Children Christmas Card scheme), others through credit unions, and some through specialist savings providers. The key advantage is psychological: having a dedicated account reduces the temptation to spend the money on other things throughout the year. However, the financial terms vary significantly — some credit union clubs pay a small dividend, while some commercial schemes offer no interest and carry FSCS protection risks.

Credit union Christmas savings clubs are generally the best option because they combine the savings discipline of a club with the protection and transparency of a regulated financial institution. You can only withdraw the money at specific times (typically November to December), which is precisely the anti-temptation feature you want. Credit unions are regulated by the FCA and are covered by the FSCS up to £120,000, so unlike commercial Christmas clubs, your money is protected. Many credit unions offer competitive interest rates (typically 3-5% AER) on Christmas club accounts, better than most high street banks. To find a credit union Christmas club near you, search the Association of British Credit Unions (ABCU) directory or your local credit union website.

If you prefer full flexibility, a simple savings account with a direct debit is equally effective without the restrictions. Set up a standing order to transfer a fixed amount (say £50 per month) to a dedicated savings account on payday. Name the account 'Christmas Fund' to make it psychologically distinct from your emergency fund. The power of this approach is that it mirrors exactly what a Christmas savings club does, but with no withdrawal restrictions — useful if Christmas expenses arrive earlier than expected. The key is setting the transfer up to happen automatically so you never 'see' the money in your current account. Target: save £100 per month from March to November, giving you £900 before Christmas plus interest earned throughout the year.