To beat inflation with our everyday savings and on wages paid into our banks is not easy.
If you don't shop around or look for special products to boost your interest rate, you're probably earning no more than 0.1% – and that's before tax is taken off.
Asda has a solution
If you are an Asda shopper and you get in quickly, you could earn the equivalent of 129 times as much interest with one of its gift cards. This certainly counts as a "special product".
If you take out an Asda Christmas Savings Card and load money onto it before 19 November 2012, Asda will add a bonus onto it. Load £49 onto the card and you'll get a £1 bonus, £97 will give you a £3 and £144 will give you the maximum bonus of £6.
Get as many cards as you want
You can have £144 topped up by £6 to £150 on as many cards as you want. The best bit is that you can still use these cards long after Christmas.
Let's say you get ten such cards and top them up in full. You'll have £1,500 on your cards after the Christmas bonuses are paid.
Let's say your family also spends £300 per month on Asda groceries. This means you'll use up the money on the cards in five months.
After the fifth month, you'll have benefited from the bonuses you were paid. It will have been the equivalent of earning 12.9%pa interest, assuming you're a basic-rate taxpayer. The bonus is actually £6 after tax, so the after-tax return is a massive 10.3%.
That sure beats savings accounts, even if you shop around.
Use these cards in combination
The best way to beat both banks and inflation is to keep your money agile and not tied up in long-term products, so that you can use it with unusual products like this as when they turn up.
Asda shoppers shouldn't put all their savings onto these cards, but by putting some of their savings on them they can boost their overall rate when used in conjunction with easy access accounts that are paying just 2% to 3%, for example. With Asda's help you could easily beat inflation overall, perhaps by a good margin.
Things to note about the Asda cards
- Get the cards in-store and not online, or you'll pay delivery charges.
- The cards can be used in full or part payment on in-store Asda goods only, excluding petrol and lottery tickets. It also excludes "third party concessions and products", which might potentially mean you can't use them in Asda cafes or photo booths, for example.
- A card will be cancelled and your savings lost if you don't use it for two years after your last transaction. However, that's plenty of time to spend all the savings you put on the cards before 19th November 2012.
- Your savings on the card are not protected by the Government so, if you're worried about Asda's financial soundness, don't use them.
- You can register the cards online to reduce the chance that a thief can use them after they've been stolen. However, if a card is stolen and used before you report the theft, you won't get the used money back from Asda.
- If Asda tries to convince you to load more money on the gift card by offering sweeteners, think carefully before doing so. Most such offers from retailers merely encourage you to spend more money, not save or earn any.
- Finally, don't forget to pay at Asda with the savings cards every time you shop there, starting as soon as you have received the bonuses in mid-November. If you leave money sitting on a card without using it, you'll lower your effective annual interest rate, because Asda is not promising to pay further generous bonuses.