Joy of Christmas

It might seem a bit early to be thinking about next Christmas, but that is exactly what Bradford & Bingley is urging people to do.

With many people still recovering from the shock of opening their credit card bills at the end of January, planning for next Christmas is unlikely to go much further than vowing not to spend as much money.

Figures from the British Retail Consortium show that the average person is expected to have spent about £330 on gifts and the average household £920 on Christmas day celebrations.

But a little forward planning can avoid a repeat of this year’s post-Christmas financial stress, and Bradford & Bingley has devised an innovative savings vehicle to help out.

It has launched a specially designed, limited issue Christmas Saver account paying eight per cent AER.

Customers can put away between £10 and £150 each month and are then permitted to withdraw their savings and interest on the first day of advent – December 1st 2006 – in time to go Christmas shopping or pay off their credit card bill in January.

“Choosing the ‘spend now, pay later’ way that many of us do can be costly,” said Steve Potter, head of savings at Bradford & Bingley.

“For example, if a customer spent £900 on their credit card last Christmas and then pays the minimum-monthly payment, which is typically five per cent at 16 per cent APR, they will take 64 months to pay off their debt and will end up paying out £288.74 in interest. This is a false economy. Arranging a regular savings plan could take much unneeded stress out of Christmas.”

Under the terms of the account, the minimum amount need to open it is £10, and a contribution must be made each calendar month.

The maximum balance is £1,500 and interest will be paid when the account matures on December 1st 2006, before which no withdrawals are permitted.

Mr Potter added: “We hope to encourage people to put some money away each month for big expenses like Christmas and see them rewarded with a really good interest rate.”

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