Cut the cost of shopping for Christmas gifts

Follow our famous five-step action plan to save hundreds of pounds shopping for Christmas gifts.

It's the start of December so, naturally, astronaught Santas loom overhead on my walk to work. When I get home, I am forced to watch B-list celebrities selling frozen food in Christmas TV ads. And wherever I go, jingly jingles – possibly about jingle bells - jingle and jangle all day long in my ears.

’Tis the season to be jolly but, like me, you may well dread this time of year. The hustle, the bustle, the unrelenting, unavoidable kerfuffle. The ridiculously over-priced tat you are forced to fork out for. And, at the end of it, a big empty hole in your bank balance.

Especially right now, when we’re all feeling the pinch.

Luckily, thanks to the rise of internet shopping, it’s easy to avoid the Christmas shopping crowds. But what about cutting your costs? Do you know how to hunt down the biggest online bargains – and get discounts even when none appear to be on offer?

As loyal readers will know, here at lovemoney.com we have developed a five-step process you can use to fight back against the Christmas shopping nightmare – and save yourself hundreds of pounds into the bargain. (I followed it, last year, and it really does work!)

Step 1: Get the right credit card

The first step to cost-effective Christmas shopping is to figure out which type of credit card you should use for your Christmas shopping purchases. There are two options and, in different circumstances, both should save you money.

If you have money in the bank to pay for all your purchases, the best option is to get a cashback credit card. This allows you to earn cashback on everything you spend – but it is only a good idea if you can pay off the balance in full every month, as otherwise you will pay far more in interest than you will earn in cashback.

There are a few cards worth considering here. First up, there's the Capital One World MasterCard, which offers 5% cashback on purchases in your first three months (up to a maximum of £100) and up to 1.25% thereafter.

A good alternative comes from American Express, which pays 2.5% in the first three months up to £100, and up to 1.25% after that. For a good comparison of how much cashback you can make with the various cards, check out New cashback card shakes up the market.

However, American Express isn't accepted everywhere. A good alternative is the Egg Money World Mastercard, which pays a flat rate of 1% up to a maximum cashback of £200. Just be aware there is a monthly £1 charge for this card.

If, however, you don’t have money in the bank to pay for all your purchases immediately, then the best option is a 0% on purchases card. With these cards, you won’t pay any interest on your purchases as long as you clear your debt within a set period.

The best card around at the moment is the Tesco Clubcard Credit card, which offers 0% on purchases for 15 months.Other cards worth considering include the M&S credit card, offering 15 months, and the Barclaycard Platinum, which offers 14 months free of interest.

Step 2: Use a shop-bot

You can find out where the item you want to buy is cheapest using a shop-bot, which compares the prices of the item across different shops on the internet.

Shop-bots we like here at lovemoney.com include: Kelkoo, Pricerunner and find-dvd.co.uk. You can also download the Invisible Hand tool, which sits in the background of your web browser, but then highlights the cheapest place to find an item whenever you write it in a search engine or on a website.

Just remember to check whether there are any delivery costs too as this may not be clear from the table of results.

If there are several shops offering the item at around the same price, make a mental note of all of them. You may find one retailer is even cheaper the others after going through steps 3 and 4.

Step 3: Register with a cashback website

Next, find a cashback site that is affiliated with the merchant you want to buy from.

This will allow you to earn cashback on transactions you make through the site. Find out more about how cashback websites work in How to be a cashback king!

Quidco is perhaps the most well-known cashback website, and is affiliated with the vast majority of merchants. 

However, this site will keep £5 of your cashback once a year as an annual charge.

Others, such as Top Cashback and GreasyPalm, are free to join and use, but may not always have as good cashback deals as Quidco.

If you have time, it’s worth checking them all out to figure which site is best to use for each purchase.

Step 4: Find a voucher code

Most online retailers offer you the chance to type in a promotional voucher code before you purchase your item.

To find one of these codes, have a hunt around on the internet.

First, look through the various forums on the internet where members share their vouchers. The best, in my opinion, is hotukdeals.com. I’ve found several useful vouchers on there, and saved myself at least £50 over the past year by doing so. You can search by retailer, and others rank the vouchers according to how hot the discount is.

But it’s not the only decent discounts site around. Other sites worth checking out include myvouchercodes.co.uk, vouchercodes.com and piggy-code.co.uk.

If you can’t find a voucher that way, don’t forget you can always just try a Google search. Type in ‘voucher’ and then the name of the merchant and see what happens.

Step 5: Go bargain-shopping!

These four steps are all very well if you know in advance what item you want to buy. But what if you don’t? Where should you go to find a bargain?

Here at lovemoney.com, we have two blogs which could save you a fortune. For the best shopping discounts and deals, be sure to read Frugal Friday, while Frugal Food rounds up the best deals on food, whether you're cooking yourself or headed to a nice restaurant. Subscribers get both blogs in their email inbox every Friday lunchtime, but  there's lots of things you can do to identify great deals.

For example, you could:

• have a hunt around on pricecutreview.com/uk for details of the biggest discounts on goods from Amazon.
• check out the hottest deals of the week on the forums mentioned above, such as Hotukdeals.com.
• set up a new email address specifically for your shopping and join the mailing lists of all your favourite stores. Often they send out promotional codes and special offers in these emails.

Alternatively, if this seems like too much hassle, you could just keep an eye out on Friday for our weekly email!

This is a lovemoney.com classic article, updated for 2011.