How to save, fund and budget for Christmas in 2024

As the Christmas season approaches, the typical monthly spend for a household in the UK is expected to rise by 29% in December alone, according to data from the Bank of England. This could see expenses skyrocket by as much as £713.

This figure represents a large portion of the average UK monthly salary, which means many of us need to rely on more than just our regular income for the festive period.

Even if you have an excellent budget plan in place, there are other ways to borrow for Christmas which may not cost you any interest at all. In addition, we’ve listed some good savings habits you can start using today to prepare your budget for future festive periods.

Before you begin planning for any Christmas spending, consider setting out a budget so you don’t find yourself making purchases you can’t afford.

Start by looking at your disposable monthly income, and then work out how much extra you’re prepared to spend. You don’t need an exact figure but keep a general number in your mind for when you go shopping.

This can help you keep spending at a sustainable level, so once January comes, you’re not burdened with a large amount of debt.

For many people their December salary won’t be enough to cover their Christmas spending alone. So, if you’re looking to use some form of credit to supplement your budget, consider some of the options below. Remember, credit needs to be used responsibly and you shouldn’t borrow beyond your means.

This type of credit card offers its users a 0% interest rate for a fixed period, meaning its main advantage is that if you were to repay your expenditure in full before the end of this period then your debt won’t incur any interest. This can be useful when shopping during specific periods such as for Christmas or Black Friday.

The drawback with a 0% purchase credit card is that it can take several weeks for the application to be processed and to receive the card. So, if you want this card quickly, then timing is crucial.

Furthermore, keep in mind that if you don’t clear the outstanding balance on the card before the end of the 0% period, you could be charged a high interest rate.

It’s also worth noting that other activities on this type of card, such as balance transfers or cash withdrawals, may incur a charge, so you should try to stick to making purchases only.

Instead of a credit card, you could make your Christmas purchases on a debit card. But if you exceed your current balance you’ll revert to an overdraft which can also charge large interest fees. This is where a money transfer card can be useful.

This type of card is designed to pay money straight into your bank account to clear any overdraft charges. In return, lenders may set their own rate of interest and possibly require a one-off fee.

Just like a 0% purchase credit card, there are some money transfer cards that include an interest-free period too. If you want to stick to using your debit card, these offers can be a cheap way to borrow money.

Another alternative to help pay for Christmas is to use a personal loan. This has the advantage over a 0% credit card in that the loan application can be accepted and the money received sometimes on the same day as the application.

However, you’ll incur interest from day one, which means you should budget and stick to a payment plan. This is crucial, as missed payments will have a negative impact on your credit score.

A personal loan can also be ideal if you want to make purchases with the flexibility of cash, which can seem more attractive than many of the 0% credit cards on the market.

Lastly, taking advantage of some of the best current account switching incentives on the market can help bolster your budget for Christmas.

You can find some of the best offers on the market by visiting our table. However, when choosing your account, pay close attention to the opening criteria. For example, you may not be eligible for some switching incentives if you’ve opened a current account with the provider before.

When changing accounts, many providers will require you to use the Current Account Switch Service (CASS) which is explained in more detail in our current account switching guide.

Before taking out any form of credit for Christmas, have you considered saving instead? This can be a great habit to get into and can help reduce some of the financial pressures you may face in January.

If you earn a monthly income, this means setting aside a portion of it into a savings account. This will most likely be either be a notice savings account, easy access savings account or regular savings account. More information on the differences between these types of savings accounts can be found on our main savings page.

Whatever account you choose, the benefit of paying for Christmas through a savings account is that you’ll earn a rate of interest on your monthly contributions. You therefore avoid being charged an interest rate, and you can earn money instead.   

A Christmas club is another way to save for the next festive season.

You sign up with a club in the early months of the year and pay a regular fee, normally weekly or monthly. Then, by October and November, the club will issue vouchers which you can use in your favourite shops to buy presents, food and decorations.

Importantly, once you join the club your money is locked away, so you can’t use it in the middle of the year if you change your mind. If you do want to access your money, you’ll likely face penalties to withdraw it.

If you would prefer immediate access to your money, and to earn interest on your balance, an easy access account could be a better option. Putting your money in an easy access account also means that when you withdraw your money for Christmas, you’re free to spend it as you wish, and won’t be restricted to certain vouchers issued by your club.

To find the best rates for variable savings accounts, visit our charts by clicking on the links below. These tables are updated daily by our data team, to ensure you see the most up-to-date offers on the market at any given time.

• Easy access account
• Notice accounts
• Regular savings accounts

It’s also worth considering that Christmas clubs are not regulated by the Financial Conduct Authority (FCA). This means that if your Christmas club was to go bust, you could be at risk of losing your money. All the savings accounts listed above, however, are protected under the Financial Services Compensation Scheme (FSCS), so if your provider was to go out of business, you’d be entitled to recover up to £85,000 of your deposit.