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

PROMOTED VIDEO
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

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee