Money & Budgeting

Christmas Savings Clubs — Are They Worth It? UK Guide

A comparison of Christmas savings clubs, supermarket savings schemes, and alternative ways to save for Christmas. How they work, which are protected, and whether they're the best option.

By PocketWise · · 5 min read

Christmas savings clubs help you spread the cost of Christmas over the year by saving a fixed amount each week or month. Here is how they work, which are safe, and whether you would be better off saving another way.

How Christmas Savings Clubs Work

Feature Detail
How you save Pay a fixed amount weekly, fortnightly, or monthly throughout the year
When you get your money November — typically as vouchers, hampers, or store cards
Payment methods Direct debit, online payment, or cash through an agent
What you receive Prepaid vouchers (Love2shop, store vouchers), hampers, or gifts
Bonus Some schemes add a small bonus (2%–3%) on top of what you save
Cancel? You can usually cancel and get your money back, minus any bonus

Available Christmas Savings Schemes

Hamper-Style Clubs

Scheme What you get FCA regulated? Bonus
Park Christmas Savings Love2shop vouchers, supermarket vouchers, hampers Yes (e-money) Small bonus on qualifying orders
Variety Christmas Club Vouchers and hampers Check latest status Small bonus

Supermarket Savings Cards

Supermarket How it works Protected? Bonus
Tesco Christmas Saver Load money onto a card throughout the year, spend in Tesco stores November–December Not FSCS-protected Check current offer — has previously offered up to 5% bonus
Asda Christmas Savings Card Load money monthly, receive a card to spend in-store Not FSCS-protected Check current offer
Iceland Bonus Savings Card Save regularly and receive a bonus on top Not FSCS-protected Has previously offered 2%–4%
Morrisons Check availability — schemes vary year to year Not FSCS-protected Varies

Note: Supermarket schemes change annually. Check each supermarket’s website from January/February for the current year’s scheme.

Credit Union Christmas Savings

Feature Detail
How it works Open a Christmas savings account at your local credit union
When can you access? Typically released in November
FSCS protected? Yes — up to £85,000
Interest/dividend Varies by credit union — typically 1%–3%
Flexibility Can withdraw earlier if needed (though not encouraged)
Find one findyourcreditunion.co.uk

Are Christmas Clubs Worth It?

Pros

Advantage Why it matters
Forced saving You commit early and can’t easily dip into the money
Spreads the cost Small regular payments instead of a large December outgoing
Removes temptation Money is not sitting in your current account
Convenient Automatic payments — set and forget
Social accountability Some schemes use local agents — sense of commitment

Cons

Disadvantage Why it matters
Low/no interest Most clubs pay little or no interest — worse than a savings account
Locked into vouchers You receive vouchers, not cash — limited where you can spend
Not always protected Some schemes are not FCA-regulated — risk of loss if company fails
Inflexible You can’t easily access the money if you need it for an emergency
Voucher expiry Some vouchers have expiry dates
Miss better deals Being locked into vouchers means you can’t shop around for the best prices elsewhere

Christmas Club vs Alternative Savings — Comparison

Saving £50 per month for 10 months (January–October):

Method Total saved Returns/bonus Total available Where you can spend Protected?
Park Christmas Savings £500 ~£10–£15 bonus (2–3%) ~£510–£515 in vouchers Shops accepting Love2shop Yes (FCA e-money)
Tesco Christmas Saver £500 ~£25 bonus (if 5% offered) ~£525 in Tesco Tesco only No
Credit union Christmas account £500 ~£5–£15 dividend (1–3%) ~£505–£515 in cash Anywhere Yes (FSCS)
Regular saver account (6% AER) £500 ~£14.50 interest ~£514.50 in cash Anywhere Yes (FSCS)
Easy-access savings (4.5% AER) £500 ~£10 interest ~£510 in cash Anywhere Yes (FSCS)
Cash ISA (4% AER) £500 ~£9 interest (tax-free) ~£509 in cash Anywhere Yes (FSCS)
Jar under the bed £500 £0 £500 in cash Anywhere No

Key takeaways:

  • A savings account pays similar or better returns and gives you cash, not vouchers
  • A credit union offers the best of both worlds — discipline of a Christmas account plus FSCS protection and cash
  • Christmas clubs make sense if you genuinely cannot resist dipping into a savings account

Safety and Protection

Scheme type Regulation What happens if the company fails?
FCA-regulated e-money (e.g. Park) FCA regulated Your money should be safeguarded — ring-fenced from company’s own funds
Supermarket savings cards Not specifically regulated Money is a credit with the supermarket — at risk if the retailer fails
Credit union FCA regulated, FSCS member Protected up to £85,000 by the FSCS
Bank savings account FCA regulated, FSCS member Protected up to £85,000 by the FSCS

The Farepak Lesson

Detail Information
What happened Farepak Christmas savings club collapsed in October 2006
Impact ~150,000 customers lost approximately £40 million in savings
Why Company was not regulated — customer money was not ring-fenced
Outcome Led to calls for regulation of Christmas savings schemes
Lesson Always check that a scheme is FCA-regulated before saving

Budget Template — Christmas Costs

Use this to work out how much you need to save:

Category Budget
Gifts — children £
Gifts — partner £
Gifts — parents/grandparents £
Gifts — other family £
Gifts — friends £
Christmas food and drink £
Christmas dinner/meal out £
Decorations and tree £
Wrapping paper, cards, postage £
Party/event clothes £
Christmas activities/pantomime £
Travel to see family £
Total Christmas budget £

Divide your total by 10 (months January–October) or 12 for the monthly amount you need to save.

Average UK Christmas Spending

Category Average spend (per household)
Gifts £400–£600
Food and drink £150–£250
Socialising and events £100–£200
Decorations £30–£60
Travel £50–£150
Total £730–£1,260

Tips for Saving for Christmas

Tip Details
Start in January 12 months of saving = smaller monthly amounts
Set up a separate account Keep Christmas money away from everyday spending
Automate payments Standing order on payday — treat it as a bill
Track spending as you go Use a spreadsheet or app to avoid overspending
Buy gifts throughout the year Sales in January, mid-year clearances
Set a per-person budget Agree spending limits with family
Use cashback sites TopCashback and Quidco for online gift shopping
Consider Secret Santa One gift instead of buying for everyone

Sources

  1. MoneyHelper — Everyday money