Interactive Investor

Why are Christmas savings deals dying out?

21st December 2020 09:29

Sam Barker from interactive investor

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Long-standing festive regular saver deals are declining, with just one deal on the market.

Consumers hunting for traditional Christmas savings deals have been left stranded as building societies have largely abandoned the products.

Around a dozen Christmas-branded regular saver accounts are normally launched by building societies in the run-up to the festive period. The deals are a long-standing feature of the savings market.

But this year there is just one, the one-year Christmas Saver Bond from Monmouthshire Building Society. This pays 1.1% interest on up to £1,000 a month and can be opened online or in one of the company’s 29 branches.

One non-denominational deal has also been launched: the Chorley Building Society Seasonal Regular Saver, paying 1.25% interest on maximum balances of £250 a month for one year.

The rate makes the deal the third-best one-year regular saver on the market, behind Scottish Building Society’s 1.35% and Coventry Building Society’s 1.3%.

But it can only be opened by post or in one of Chorley’s three branches, limiting the number of people who are likely to apply for one.

There are 16 regular savers on the market overall, according to financial data company Moneyfacts.

Why the drought?

Tom Adams, of financial analysts Savings Champion, said: Christmas regular savers are a good PR exercise and really capture people’s imaginations. There is potential there for them to be a really good thing for a building society to market, but we have definitely seen fewer.

 The providers may feel these deals will be less popular with savers due to the struggles of this year.”

Consumer apathy towards saving due to record low interest rates may also be behind the Christmas regular saver drought. 

The top Christmas saver account last year paid 2.7%, from Principality Building Society, on a maximum of £1,500 saved in 12 months.

Other savings options at Christmas

There are few other Christmas-related options for savers.

National Savings & Investment (NS&I) Premium Bonds are often gifted during the festive period. These lottery-style deals have a top prize of £1 million but pay an average ‘interest rate’ of 1% a year, assuming the bondholder has average luck.

When it comes to investing, interactive investor research shows that parents and guardians actively reduce Junior ISA contributions in December.

The average lump sum contribution in December 2019 was £454 - 78% less than the average for the previous 11 months (£808).

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