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; request a free guide on NISAs from Hargreaves Lansdown

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
PROMOTED VIDEO
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Life and Style
fashion
Finacial products from our partners
Property search
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

    Quantitative Developer

    £700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

    Web developer (C#, MVC4, HTML5, CSS3, Javascript, Jquery)

    £30000 - £44000 per annum + Bonus+Benefits+Package: Harrington Starr: Web deve...

    Senior Automation QA Engineer (Java, Selenium WebDriver, Agile)

    £40000 - £65000 per annum + benefits+bonus+package: Harrington Starr: Senior A...

    Web developer (C#.NET, ASP.NET, MVC3/4, HTML5, CSS3, JAVASCRIPT

    £35000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Web deve...

    Day In a Page

    Ferguson: In the heartlands of America, a descent into madness

    A descent into madness in America's heartlands

    David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
    BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

    BBC faces corruption allegation over its Sir Cliff police raid coverage

    Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
    Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

    Lauded therapist still in limbo as battle to stay in Britain drags on

    Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
    Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

    Lewis Fry Richardson's weather forecasts changed the world...

    But could his predictions of war do the same?
    Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

    'I want to have contact with the audience, not iPhones'

    Kate Bush asks fans not to take photos at her London gigs
    Under-35s have rated gardening in their top five favourite leisure activities, but why?

    Young at hort

    Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
    Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

    Beyond a joke

    Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
    The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

    The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

    Sadly though, the Lawrence of Arabia star is not around to lend his own critique
    Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

    A wild night out

    Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
    Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

    Comic Sans for Cancer exhibition

    It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
    Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

    Besiktas vs Arsenal

    Five things we learnt from the Champions League first-leg tie
    Rory McIlroy a smash hit on the US talk show circuit

    Rory McIlroy a smash hit on the US talk show circuit

    As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
    Boy racer Max Verstappen stays relaxed over step up to Formula One

    Boy racer Max Verstappen stays relaxed over step up to F1

    The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
    Fear brings the enemies of Isis together at last

    Fear brings the enemies of Isis together at last

    But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
    Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

    Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

    Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment