Six quick and safe alternatives to sending Christmas cash in the post
It may not be the most thoughtful of presents, but giving cash for Christmas at least allows the receiver the chance to buy what they actually want. However, sending cash in the post can be insecure. If you’re worried about sending money to children, family or friends, here are six quick and safe alternatives.
Research by the Cheque and Credit Clearing Company (C&CCC) suggests cheques are a popular way of giving someone a gift in December. One of the benefits is if you post a cheque to someone and they don’t receive it, you can contact your bank to place a stop on it.
Technically cheques don’t have an expiry date. They are valid for as long as the debt between the two parties (i.e. the person writing the cheque and the person they give it to) exists. That said, the usual practice is to cash them within six months as C&CCC says banks are unlikely to process them if they’re any older.
Because of the cheque’s clearing process, after two working days the receiver starts to gain interest on the funds; after four working days they can withdraw the money and after six working days the cheque can’t bounce and the money is the receiver’s to keep. At this point, they’re protected from any loss, even if the cheque turns out to be fraudulent.
If you don’t want to deal with the hassle of pin numbers and sort codes but you know the recipient’s email address, you may be able to send money this way, via an app.
The Circle Pay app is primarily aimed at those who send, receive and request money in a social or functional context, such as splitting cab fares, dinner or rental bills, but it can also be used by those aged 18+ wanting to send money at Christmas.
It lets you send money when you enter the email address of the recipient who also downloads the free app. They can then withdraw the money into their bank account by scanning their bank card to register the details.
There are no limits on spending and receiving money through Circle Pay, but there is a limit on how much new customers can deposit into their accounts within a seven-day period (£300).
Gift card or gift voucher
A little less cold-hearted than cash, gift cards or vouchers can be bought to spend at a particular retailer or multi retailers. For instance, the One4all gift card is valid at 50,000 stores across the UK, from brands such as Argos, M&S, John Lewis and more.
Gail Cohen, director general of the UK Gift Card and Voucher Association (UKGCVA), says gift cards are becoming increasingly popular year-on-year, as they can be redeemed in store or online.
The vast majority don’t come with any fees so the receiver can use the full value of the gift, but in some cases, the issuers may apply administrative fees after a certain amount of time has passed so it may be best to spend them as soon as possible. The UKGCVA says it suggests an expiry date of around two years from the date of purchase, or from the most recent transaction, but it’s down to the individual retailer and they may offer a goodwill gesture if the card expires.
One other reason not to wait to spend the gift card is in case the retailer goes bust. Cohen explains: “Whether or not gift cards and vouchers will be honoured after a retailer goes into administration or closes altogether is determined by regulations related to insolvency law, rather than any issues with the gift card or retailer itself.”
If you’re going to buy a gift card, it may be best to do so using a credit card as if a retailer goes out of business, Section 75 of the Consumer Credit Act should enable you to get your money back, as long as it’s worth over £100.
The Circle Pay app, as above, also allows you to send money by simply clicking on one of your phone contacts and by instant messenger.
Otherwise one of the most known mobile to mobile payment service, Paym, has more than three million people registered since launching just over three years ago. It allows users to send and receive money without needing a sort code or account number.
Currently 15 UK banks and building societies offer Paym, including Santander, Lloyds and Nationwide. You need to register your mobile number to the current account you want to use via your existing mobile banking or payment app. You can then select a mobile number in your contacts or manually enter a mobile number, followed by the amount you’d like to transfer.
As is typical with these apps, it also requires the recipient to register their mobile number with their bank or building society so check they bank with one of the participating lenders first. If you do send money to someone who isn’t registered to Paym, they’ll receive a text message with details of how to join and get the money.
Online bank transfer
One of the most established ways of transferring money is to do it online via your bank or building society. You can even do this on the go as long as you have an internet connection and recipient’s account number and sort code. It’s usually free to do.
Your individual bank or building society may have limits on how much you can send. If you send it via Faster Payments, it can be received almost immediately, or can take up to two hours. You can add a specific date for the payment to be made and you can put a reference so you and the recipient know it’s from you, such as ‘Christmas gift, love aunt Amy’.
A number of sites such as Nimbl, Osper and goHenry have launched in the last few years giving children a lesson in budgeting and responsibility when it comes to their money. With a prepaid debit card coupled with an app, children can see exactly what they’re spending and where. Plus there’s no overdraft facility so there’s no chance of your child spending more than they have and parents can set daily, weekly or monthly allowances, plus block any transactions. The cards can be used both online and in-store and are ‘age appropriate’ so for instance they can’t be used to buy adult goods.
Parents set up an account and then load the card with money so if you’re a friend of the family or grandparent, you may need to transfer money to the parent or guardian, or give them cash to their hand, in order to give money to the child.
Depending on the firm you go with, there may be annual fees so it’s best to compare first.
Alastair Graham, of the Prepaid International Forum, said the prepaid accounts provide an alternative to a traditional ‘first account’.