23 June 2022 18:34

What are pros and cons of UK Building Societies compared to banks?

Are building societies better than banks?

Many people feel that saving with a building society is better than a bank. Building societies typically offer better rates on savings accounts compared with banks. According to Your Money, in 2019, the average variable interest rate paid by building societies was 1.05 per cent.

What is the difference between a bank and a building society UK?

Because banks are listed on the stock market, they are businesses and therefore work in the favour of those who invest in them, specifically their shareholders. Building societies, however, are not commercial businesses, they are ‘mutual institutions’ – owned by, and working for, their customers.

Are building societies better than banks for mortgages?

The different ownership of a building society compared to a bank means they tend to have lower overheads, so they may be able to offer lower rates on mortgages and higher interest rates on savings accounts.

What is a disadvantage of a building society?

Building societies are not as secure as they have historically been. The choice of mutual is falling and failures have become more commonplace. Many building societies have geographical restrictions. This means that you can only open an account if you live in a certain postcode or within a certain defined area.

Which is safer bank or building society?

Building societies have much more stringent rules to invest by than banks, as the board of directors is beholden to its members and by the laws governing the way a mutual is run. In fact, it is illegal for a building society to raise more than 50 per cent of its funds from the wholesale markets.

Which is the best building society in UK?

Top 5 Building Societies in the UK (October 2020 ranking)

  • Coventry Building Society.
  • Nationwide Building Society.
  • UK.

How safe Are UK building societies?

If you have only one account. Cash you put into UK banks or building societies – that are authorised by the Prudential Regulation Authority – is protected by the Financial Services Compensation Scheme (FSCS). The FSCS deposit protection limit is £85,000 per authorised firm.

Where is the safest place to keep your money UK?

But for much larger sums there’s only one place that is safe: National Savings & Investments. Money with NS&I is safe to any amount. Easy access Income Bonds (invest up to £1 million each) pay 1.10 per cent interest (direct to you, so you’d need to reinvest it).

How does a building society differ from a bank?

Basic Differences
Banks are companies which are usually listed on the stock market. Hence, they are owned by and run for the benefit of its own shareholders. Building societies on the flip side do not have external shareholders involved in their business.

What are the advantages of building societies?

Lower running costs. On average, a building society is cheaper to run than a bank as it’s owned by its members. This could mean that the savings are passed on to the members in the form of competitive interest rates.

Who owns Nationwide Building Society?

We’re a building society, or mutual, owned by our members. That’s anyone who banks, saves or has a mortgage with us. We’re run for their benefit and to help the communities around us. We’re not run for shareholders in the same way that banks are.