The Difference Between Banks and Building Societies
There’s sometimes a bit of confusion as to the difference between a bank and a building society. This confusion is only natural, as modern building societies closely mirror many of the services that banks offer, and regularly become banks or are purchased by them. So, what then is the real difference?
Well, historically, building societies were groups of people who joined forces to leverage the strength of their joint assets to enable members to construct or purchase a home. Once a member had their home, they were no longer part of that building society. Further, when the last member had his or her home, the society dissolved itself.
Fast forward to modern times, and rather than focusing on the benefits of member, most building societies are profit oriented. In this case, their rates and benefits are quite often comparable to those of banks. This shift from being beneficial to profitable began around 1980. Since that time fully two thirds of the entire UK building society assets have converted to or been purchased by banks. Needless to say there were also scandals involved, though this in no way implies that any building society is better or worse than another.
Rather, it’s to say that the charm of building societies is largely a thing of the past. Today’s banks offer many of the same things building societies provide, and in some cases, even more. Both banks and building society retail deposits are guaranteed by the FSCS (Financial Services Compensation Scheme) up to £85,000 , and both offer very similar products and rates.
We’d like to hear from you, and learn which banks or building societies you’ve had success or disappointment with. Please leave your opinions and experiences below or start a new thread.
Poll
