Food

Saving for Christmas

Updated: 01 Mar 2011

Introduction

Saving early can help you eat, drink and be merry next Christmas. But where's the best place to put your money?

We've compared 4 ways of saving for next Christmas: supermarket Christmas clubs, bank savings accounts, Christmas hampers and pre-paid cards, to find out which offers the best value for money.

Christmas Clubs

How they work

At Countdown, Woolworths and Foodtown you can buy Christmas club vouchers throughout the year. If you redeem them between 1 December and 31 January, you receive a 5 percent bonus.

Fresh Choice and Supervalue also run voucher-based Christmas clubs, and Fresh Choice offers a Christmas Saver Plan which gives a 5 percent discount on weekly automatic payments – for example to save $15 each week you pay $14.25 into your plan. The plan has a set target amount and when you reach this at Christmas you're given vouchers to spend in the store.

New World and Pak'nSave issue cards. You set up an account and can pay into it through regular automatic payments or a direct debit, or at the supermarket. Bonuses vary from 2 to 7.6 per cent depending on where you are in the country and when you join – the sooner you join, the higher your bonus. Bonuses apply only to spending at the supermarket during December.

In the upper North Island and the South Island you can spend your savings any time before 1 December – but you’ll lose your bonus on this spending. Any money you have left to spend in December will still be eligible for the bonus.

In the lower North Island you can’t spend your savings before 1 December.

Upside

The automatic payments or direct debits force you to save, and you can top up whenever you choose.
You get to choose the goods you want.
You can spend your saved amount over several shopping trips.
Some stores have special club events with extra bargains.
You can earn One Card or Fly Buys points on your shopping.
The Pak'nSave and New World cards are relatively secure – if lost or stolen, they can be disabled.

Downside

Vouchers can be a hassle – and they're not secure. You could lose them or have them stolen.
Your bonuses only apply during December (or December and January for some schemes), which means you’ll have to battle the Christmas crowds.

Bottom line

Supermarket Christmas clubs offer the best value for money.

Bank savings accounts

An "on call" savings account that allows you ready access to your money in case of an emergency – but rewards you for not dipping into your savings – is best for Christmas saving.

How they work

The easiest way to operate one of these accounts is to set up an automatic payment into it (at least monthly and preferably on pay day). All the accounts we mention here allow you to start saving from your first dollar – they don’t require a minimum deposit. Some will let you set an end-date for the savings you make; many also offer further rewards such as cash and other prizes. Most of these accounts will charge you for each withdrawal.

There are only 2 accounts designed specifically for Christmas saving:

PSIS’s Christmas Saver Account credits your interest quarterly. You can also ask for the account to be set up with a restriction on ATM/eftpos withdrawals.
Aotearoa Credit Union’s Christmas Saver Account earns interest monthly, crediting it on 30 November every year. Withdrawals can be made only in December and January.

But there are other accounts you could use for Christmas saving. These 6 pay a bonus interest rate each month if the balance in your account has increased or if you've made no withdrawals:

ANZ Serious Saver
BNZ Rapid Save
Kiwibank Fast Forward Saver
National Bank eSaver (phone and internet only)
Westpac Online Bonus Saver (phone and internet only)
PSIS Step Saver Account.

You may have to pay a fee of $4 or $5 if you make more than one withdrawal per month from these accounts, which is a good incentive to keep to your savings plan.

The next 3 accounts don't pay a bonus rate. But they are their bank's best option for targeted saving:

ASB FastSaver (phone and internet only). It pays the same rate of interest whether you have made withdrawals or not.
Rabobank's RaboDirect Savings Account (internet only).
TSB Saver Plus (this account doesn't earn interest but you automatically go into a monthly draw to win a car). There are no fees for using eftpos or ATMs (its own or other banks') – but that’s not much of a “plus” when you’re aiming to save rather than spend.

In January 2011, the highest rate you could earn on the accounts that pay interest was around 4 percent (including bonus interest rates).

None of these savings accounts charge maintenance or base fees.

Upside

Most of these accounts actively encourage you to save. And automatic payments (if you choose them) force you to.
Your money earns interest.
Bank accounts are flexible: you can decide what to spend your money on.
Your money is readily available for an emergency.

Downside

Interest rates may go down – so an account may not offer as good a deal as a supermarket Christmas club.

Bottom line

These accounts are an easy way to save – and you can save for gifts as well as food. But a Christmas club may give you better value.

Christmas hampers

There are two main hamper providers: Chrisco and Good Guys Xmas Club (not to be confused with the Australian retailer of the same name).

How they work

You select a hamper from the company's catalogue and arrange for a regular direct debit or automatic payment to pay for it.

Hampers are delivered from November to mid December (except for their Back to School hampers which are delivered in late January). The companies say their costs include picking, packing and delivery of the hampers.

We compared the cost of two hampers with buying the equivalent goods from a supermarket:

Company	Hamper	Hamper cost	Woolworths Online cost	Difference
Chrisco	Traditional	$410 (a)	$327.84	20%
The Good Guys	Xmas Mega Hamper	$870 (b)	$598.24	31%

Guide to the table
We shopped at Woolworths Online in January 2011 for items listed in the hampers and then compared the overall prices. Christmas tarts were not available when we shopped, so we obtained their pre-Christmas 2010 prices directly from Woolworths. (a) = $10.53 per week for 39 weeks. (b) = $22.31 per week for 39 weeks. Woolworths Online includes delivery fee of $8.25.

Upside

The payments force you to save.
The goods are conveniently delivered to your home.
You avoid the Christmas hassle of crowded supermarkets.

Downside

It's an expensive way to buy groceries.
You may not want all the items in the hamper.
You have to find storage space for a lot of items arriving at once, possibly several weeks before Christmas. There are 48 different items in the Chrisco hamper we surveyed – and a whopping 91 in The Good Guys' one (including large amounts of meat).

Bottom line

Christmas hampers are convenient if you have the storage space but they're not cheap.

Hamper cancellation fees

Chrisco gives you a 21-day cooling-off period to change your mind about your order. After that, if you can't keep up with the payments the company will supply a smaller hamper. Asking for a refund comes with a hefty administration fee. Up till 3 months before the delivery date, it’s 20 percent of what you've paid in. After that, it's 50 percent.

Chrisco is being prosecuted by the Commerce Commission for possible breaches of the Fair Trading Act over whether these cancellation fees were disclosed adequately to customers before they signed up, and also whether they’re a reasonable charge to cover the cost of the lay-by.

In contrast, Good Guys Xmas Club calculates fees individually, depending on the time of cancellation and any selling costs incurred at that point (this includes costs such as administration, salaries, and the price of any hamper items already purchased pre-cancellation).

Pre-paid savings cards

There are 3 main providers: Hampsta, The Warehouse, and NZ Post with its "Loaded for Christmas" card.

How it works

You deposit payments on to your card throughout the year. You can do this through regular automatic payments or make in-store payments where this is available.

Access to your savings is locked in until the “Christmas period” (this varies from mid-November to mid-January, depending on the card). Any balance left over in your account accumulates until the next Christmas.

All of these cards have rules about where you can spend your savings. The Warehouse card is the most restrictive, as it can only be used in its stores. Hampsta's is restricted to its partner retailers (currently The Mad Butcher, Noel Leeming, Super Liquor, Bond & Bond, Hoyts, Postie Plus, Baby City, Gemtime Jewellers, Marbeck's, Event Cinemas and Toyworld).

The NZ Post card gives you the most freedom: you spend it anywhere that accepts Visa. It also has a list of partnership stores at which you can get special offers and discounts including Mitre 10, Real Groovy, Noel Leeming, Bond & Bond, Shell, Just Jeans, Portmans, and Jay Jays, among others.

Upside

You get to choose the goods you want.
Automatic payments force you to save (and you can top up in-store and online).
The Warehouse gives a 5 percent discount on all purchases made with its card.
The Warehouse and NZ Post both offer prize draws for their cardholders throughout the year.
Hampsta's joining fee is paid for by its partner retailers and not by the customers.

Downside

Your money earns no interest.
The NZ Post card costs $15 to buy – this is before you can start saving.
The NZ Post and Hampsta cards have an annual account maintenance fee ($25 and $39 respectively).
Transactions on the NZ Post card may attract a credit-card surcharge from some retailers.
You may be restricted in where you can spend your savings – especially with The Warehouse card and to some extent with Hampsta’s.

Bottom line

These schemes work like a savings account, but because of the deduction of the annual account maintenance fee for Hampsta and the NZ Post cards you don’t get to spend all the money you’ve put in. The Warehouse card is free, has no administration fee and offers good discounts – but you can only use it at The Warehouse.

How secure?

The hamper schemes are forms of lay-by. So if the company goes bust you might not get your money back, although you are classified as a creditor with priority over unsecured creditors and even some secured creditors.

Mrs Christmas folded in 2009, although rival Chrisco picked up its customers and provided them with a comparable hamper from its catalogue. However, Chrisco customers are similarly vulnerable under our Layby Sales Act.

For the schemes that are cards or vouchers, the recent collapse of Total Experience – a company which provided vouchers for Christmas gifts and services and was still trading 3 weeks before going into liquidation – is a warning to consumers of the risks they run. This issue is in the news again with the Whitcoulls and Borders book chains going into voluntary administration.

Hampsta says the funds invested in its Christmas shopping card are held with the Public Trust.

Report by Amanda Lyons.