In modern society, almost everyone, without exception, will have a bank account. Estimates suggest that there are 11,250 banks in England and Wales, with a further 1,500 in Scotland. The four largest, all located in London, hold over 160 billion sterling deposits between them.

Building societies, in contrast, are a largely underused alternative. As financial institutions, the difference between bank and building society is quite stark. Banks are more common, but you can have more control in a building society. Although societies have just 6,500 branches throughout the UK, less than half as many as banks, they hold 170 billion in customer deposits; only a little over the amount held by the ‘Big Four’ alone.

So, is this seeming lack of custom attributable to any shortcomings on their part? In truth, building societies actually have many benefits to recommend them.

How Building Societies Work

The point of building societies is to provide finance for home ownership. This is the sole purpose of their money lending capabilities. They are specifically prohibited from making any loans that are not connected to this.

Building societies have no desire to turn a profit, so they’re run in a very different way to banks. A building society is a not-for-profit enterprise, which is owned by its investors i.e. the people that sink money into it. These people have the right to vote at annual meetings on any matters that the society places before them.

The money that forms the lending pot is amassed in a very different way to the capital that banks offer. It comes from the deposits that savers make. These are usually left in share accounts, a concept similar to a current account i.e. money can be put into and taken out of the account at short notice.

The Benefits of Building Societies

Building societies like Saffron provide many advantages to their account holders, and a lot of these derive from their unique features. Unlike current accounts, share accounts pay interest with tax already deducted. This helps to make them incredibly competitive, with their offerings frequently rivalling the deposit rates found at high street banks. This has caused their popularity to soar in recent years, helping the societies’ deposits to dramatically increase over the last decade.

Building societies are not limited to just providing share accounts. Many of them also offer a fixed-term account for higher interest rates, which retains the same tax deductions.

Societies have become much more active in marketing these services (you might have noticed a lot more of their adverts on television in the last few years), and alongside this they’ve worked on expanding their range of facilities to make them more competitive. Where once they might have been accused of lacking a lot of the refinement banks offer, they’re now not only a lot more visible and better understood, but also boast cash dispensers, cheque books, credit cards and insurance related schemes to rival the services of their banking competitors.

They have a further major advantage that cannot be overstated, especially for those who work full time: far more flexible opening hours. Unlike the restrictive hours of banks, most are open from 9am-5pm, and it’s common practice for them to be open on a Saturday.

These many advantages have prompted a lot of commentators to suggest that most of us ought to have a building society account. This does not have to be instead of a bank account, but is actually best used in conjunction with one, to allow you to take advantage of both. Make a financially savvy decision today and pay a visit to your local branch.