Time to save for Christmas - 2007!

It is claimed we each spend on average £600 at Christmas on gifts, food, drink and everything else associated with that time of year.

With this in mind, it is not surprising people wish to plan and save for this. A regular savings account can be a good way to do this.

Some Christmas savings schemes (such as the recently collapsed ‘Farepak’) cannot compete with banks at offering security and protection added to decent rates of return.

It may seem ludicrous to be talking about Christmas 2007 when we haven’t even celebrated this year’s yet, however if you were interested in setting up a savings account for a 12month term, then now would certainly be the right time to look into it.

Head of Savings at Moneyfacts reminds us that regular savings accounts allow you to invest between £10 and £5,000 per month. Compare and contrast several savings providers and you could find interest rates between 6-8.25%. In some cases 10% interest can be found if you also hold your current account with the same company. The majority of providers will require between 11-12monthly payments and two thirds will allow a limited number of withdrawals.

In reality therefore if you saved £600 in a regular savings account, by the end of a year you could have earned £25 in interest (based on an interest rate of 7.5%). That alone could be a gift or a treat or an outfit.

There is a more ‘specialised’ Christmas savings account called “the Dudley Festive Saver”. Whilst the account only pays 0.25%, it does offer a bonus of 4% if you make 11 out of 12 payments and no more than 3 withdrawals. All things considered, it offers a reasonable return with free entry to an annual festive prize draw.

If you can commit some cash on a regular basis, then a savings account can be a good option at any time of year whether you choose to save for Christmas, home improvements, holidays or education.

As with any other financial decision you make, it is always advisable to thoroughly research all relevant products on offer paying close attention to any small print detailing the full terms, especially any investment, payment or withdrawal restrictions.