Historically, banks have always been viewed as the beasts of the corporate world, both in terms of their size and dominance as institutions. In contrast, building societies have carried the aura of a less powerful side-kick, and one which has always operated in the shadow of its more illustrious alternative. The impact of the Great Recession has changed this perception considerably, however, and helped to establish building societies as an excellent choice for savers, online account holders and first-time home buyers.
3 Advantages of Building Societies over Banks
With this in mind, let’s take a look at three of the advantages that building societies offer over traditional banks. These include: –
1. Better Accounts for Small Savings
Building societies are notoriously kind to the consumer, offering viable and appealing interest rates right across the board. In terms of Isa accounts, for example, building societies tend to offer more favourable rates and less rigid withdrawal terms than leading banks such as Barclays and RBS (Royal Bank of Scotland). This applies to both offline and online accounts, with the typical rate of interest for building society accounts hovering between the 4 and 6% mark. As a result, such accounts are better for first-time savers or those with minimal amounts of capital to invest.
2. Superior Mortgage and Loan Rates
In terms of offering wider financial products and offers, building societies tend to be far more innovative and generous. This particularly applies to in-demand products such as mortgages or small business loans, which are crucial to driving economic growth and helping individuals realise their financial dreams. This is largely because building societies such as Saffron tend to have a keener interest in their local areas, and assume a central role in aiding local business owners and those who are looking to gain a foothold on the property ladder. As a result, they deliver favourable rates and also strive to remove many of the barriers that restrict those in pursuit of credit.
3. Greater Online Tools and Savings Rates
Last year, RBS customers were left fuming after their online accounts were compromised. While this can happen to any financial institution at any time, online building society accounts tend to be safer and equipped with a more purposeful array of tools. Once again, the savings rates associated with building society accounts are superior to those offered by banks, ranging on average from between 4.5 and 5.8%. This is in stark contrast to banks, were less appealing rates of between 2.5 and 4% are considered to be standard.