What are the Benefits of Using Building Societies?
Are you wondering whether to change up the way you bank and save money? It might be a good time to consider using a building society rather than a high-street bank. At the end of 2014, it was said that some 19 million Brits had active accounts with building societies across the UK. These institutions have helped millions to buy homes up and down the land.
What is a building society?
Put simply, a building society is a mutual institution that’s owned and operated exclusively by its members. As building societies are not publicly listed on stock markets and beholden to their shareholders, they can make decisions that are solely for the benefit of their members.
Any profits generated by a building society is invested back into a society’s business. This is unlike banks that pay out annual dividends to their shareholders. What this means for building society members is that they can enjoy cheaper, more competitive interest rates for products such as savings accounts and mortgages. More on that shortly.
How to join a building society
Building societies tend to make it very easy to sign up and become a member. All that’s required is to visit your nearest branch or their website and fill out the necessary forms. Bear in mind, some building societies will require you to be 18 years of age or older and to invest or borrow a minimum amount to meet their eligibility criteria.
The advantages of choosing building societies over banks
- Favourable interest rates for smaller savers
When you compare interest rates between high-street banks and building societies, the latter is normally kinder to consumers. It has no reason not to offer favourable interest rates to its members. Building societies are particularly competitive when it comes to ISAs, where interest rates and withdrawal terms tend to be more liberal than the major banks. This means that first-time savers and those looking to put a modest nest egg to one side can benefit more from being part of a building society.
- Innovative mortgage products
Building societies are also more innovative and creative when it comes to designing mortgage products that are vital in helping first-time buyers get on the property ladder and families to get the space they deserve. Take a look at Trussle’s recent review of Coventry mortgage products for example, which is a building society that has been recently named Best Lender Website by the 2017 What Mortgage Awards. Better still, only 0.1% of its customers have had complaints upheld about their services by the Financial Conduct Authority (FCA) – significantly less than the industry average of 0.4% among other leading high-street mortgage lenders.
- A personable, trustworthy alternative
Many of the high-street banks have experienced cyber-attacks, resulting in account holders having their sensitive information compromised and in the hands of potential criminals. Although this can happen to any financial institution, it’s clear that major banks are a bigger target than most regional building societies. You can also rely on your local building society to offer a friendly, personable ear, with genuine support that goes above and beyond.
Put simply, there’s a time and a place for both building societies and high-street banks. You don’t need to exclusively use one or the other.