Money Insider: After a festive high time you may need a safety net

Don't let an early Christmas payday turn into a New Year charges nightmare.

The run-up to Christmas is the most expensive time of the year for most people so it's probably a great help if your employer enters into the festive spirit and pays your December salary a week or two early.

However while this might initially prove to be a boost with all those presents to pay for plus additional parties and nights out celebrating with family and friends, getting paid earlier than usual means it's even easier to lose track of your finances, particularly when your next payday could be six weeks away.

If you fail to keep a close watch on your current account balance and adopt a "worry about it later" attitude, you could run out of cash and be faced with a big bank charges bill come the first few weeks of 2011.

If you don't have an agreed overdraft, or think you need a little more financial breathing space, contact your bank or building society and arrange an authorised overdraft to see you through to January payday. It's usually a pretty pain-free process and can be arranged very quickly either online, by telephone or popping into your local branch.

Once you've got your safety net arranged, make sure you check your account on a regular basis – there's no excuse not to these days with the information available 24x7 online, on your Smartphone or via a cashpoint machine.

To emphasise the importance of staying within your agreed limit, I looked at how much it will cost if your bank agrees to pay two £75 cheques that take you £150 over your limit and then your account remains overdrawn by this amount for seven days until your January salary is received. The numbers are quite scary, with customers of Santander facing a bill of £95.83, Lloyds TSB £75.54, Nationwide Building Society £50.54 and Barclays £22.00 – so be warned.

One of the biggest problems with unauthorised overdraft charges is that there's no common policy among providers, some charge daily, some charge monthly, some do both and the level of charges varies widely, but whichever tariff you're signed up to, it can end up hitting your pocket hard.

Stay within your agreed limit and the charges you incur will be minimal, and by keeping tabs on your money at least you won't give the banks the charge to play Ebenezer Scrooge this Christmas.

Savings double from Yorkshire Building Society

There's been a flurry of activity in the fixed-rate savings market over the past three weeks, with most action in the one-to-three year products.

This week Yorkshire Building Society joined Northern Rock and the Post Office at joint No1 spot with a three-year bond paying 4 per cent. The account can be opened with a minimum balance of £1,000 and is available in branch, by telephone and online.

This launch follows hot on the heels of the Christmas Saver account paying 3.5 per cent gross launched by Yorkshire the week before.

I appreciate it is probably difficult to get your head round saving for next Christmas when you haven't even finished your shopping for this year yet, but it's certainly worth considering.

You can put away any amount up to £100 every month between now and 30 November 2011 when the account matures.

The account can be opened with as little as £10 and there is no minimum monthly investment required, you can accumulate up to a maximum of £1,200 over the account period and deposits can be made by standing order, cash or cheque.

The Christmas Saver account is also available at all Chelsea and Barnsley building society branches, featuring the same product details and also paying 3.5 per cent gross.

With savings rates at such low levels it's not going to make you rich overnight, but this time next year it could save you having to rely on your overdraft or your trusty plastic.

Savings compensation limit to increase

Currently savers are protected by the Financial Services Compensation Scheme to the tune of £50,000 (£100,000 for joint accounts), should their bank collapse.

From 1 January the limit will be raised in line with compensation levels in Europe. A €100,000 limit will be introduced in the UK but, rather than the sterling equivalent fluctuating on a daily basis and causing widespread confusion, it has been agreed to fix the ceiling at £85,000 per individual for the next five years.

This is good news for savers, many of whom are still mindful of the impact of the Icelandic banking crisis and the issues it caused to people over here.

Andrew Hagger is a money analyst at Moneynet.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
Arts and Entertainment
Jay Z has placed a bet on streaming being the future for music and videos
music
Arts and Entertainment
Festival-goers soak up the atmosphere at Glastonbury
music
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own