Spotlight on festive saving options

ROB STOCK
Last updated 10:55 26/11/2013

How do you cut costs at Christmas?

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It's a known fact among the younger members of our household that Father Christmas and his elves work throughout the year getting ready for Christmas.

Last year there was an awkward moment when my eldest exercised her newly founded reading skills and asked: "Why does this say made in China?"

I felt tempted to make a joke about Santa outsourcing to lower-wage Chinese elves, but decided against it, and the awkward moment passed.

Just like Santa and his elves, many households spend all year getting ready for Christmas through the various options that exist for pre-funding festive celebrations including hamper companies, Christmas savings accounts and card schemes and supermarket Christmas clubs.

And given that this is the time of year when people are signing up for next year with hamper companies like Chrisco, it's a good moment to think about the pros and cons of each of the options.

Ordinary bank account

Fee free, and easy to set up at banks, building societies and credit unions.

Pros: You can get at the money throughout the year, should you need it, and as they pay interest, your money should grow in value.

Cons: Interest rates are poor at the moment. If you can get around 4 per cent, after tax and inflation, the return is a paltry one.

Credit union Christmas account

Credit unions are like banks, but are owned by their customers.

Pros: Generally pay better interest than banks, though Aotearoa CU is currently paying 5 per cent. Money saved can only be spent at certain times - usually November and December. That's important, especially for women, who are often the Christmas decision-makers, as it puts money beyond hubby's reach.

Cons: Money is locked away, though in cases of hardship, the money can be released.

A Hampsta account

A savings account with a debit card. Savers drip-feed money in by direct debit, and can spent at participating stores including Mad Butcher, Noel Leeming, Briscoes, Super Liquor, and Toyworld.

Pros: Allows disciplined saving. Money saved can only be spent between December 1 and January 10. Money is held by Public Trust, so even if Hampsta went bust, it is safe.

Cons: No interest is paid. Also, there is a joining fee of $20, and a $39 annual fee. In addition, Countdown has pulled out, so general groceries can only be bought with Supermarket Online.

Hamper companies

The likes of Chrisco put out their catalogues of meat, booze, and grocery hampers, and toys. People choose what they want, and then pay by direct debit/AP or credit card throughout the year. Goodies are delivered before Christmas.

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Pros: Tried and tested. The money you give is beyond reach, and beyond temptation, or raiding by family members.

Cons: Buyers pay more than supermarket prices. If a company goes bust, customers may lose some or all of their money.

Supermarket Christmas schemes

Take Pak 'n Save's card-based scheme as an example. You can save regularly through automatic payments (minimum $5 each time), or just add money in-store whenever you can.

Pros: A way to prefund food and booze for Christmas. You can spend saved money at any time, but you get to spend more if you wait until November 30 to spend it. Here it gets a bit complicated. Depending on when you save each of your $5 contributions, they are worth between $5.32 and $5.17 when spent after November 30.

Cons: The terms and conditions are too hard to read.

GOLDEN RULES

Pre-funding Christmas makes sense.

Be aware of your options.

Choose the best way for you.

- Fairfax Media

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