What is the difference between a bank and a building society? Many people presume that banks are the same as building societies. That is false; both are financial institutions. However, it is essential to understand the differences between them. That will allow you to save money and keep more cash in hand for other things. Which option is better for you when it comes down to protecting or safeguarding your money? We will show you what to expect if you choose any option.
Key Difference Between Bank and Building Society
Banks are listed on the stock market, and they have shareholders. While on the other side, building societies have members but no shareholders. Banks have various products, but building societies often have few offers. Understanding the difference between banks and building society depends on how and for whom they operate. Banks are stock exchange listed and are, therefore, businesses. They work for their shareholders, specifically the shareholders. However, building societies are not a money-making business. Customers own and operate these businesses.
Because they don’t have to pay dividends, interest rates for building societies are generally higher than those of banks. This member-ownership and community-oriented aspect were noted by more than a quarter of the millennials who were surveyed. Although building societies tend to be more focused on financial products such as savings and mortgages than they can offer, they still can provide services similar to banks, like current accounts. However, services offered by building societies are limited to a specific region.
Building societies are a viable option for banks for those adults who have settled down and enjoy the sense of community that building societies provide. As with most things in life, one should not make decisions based on whether a bank or a building society is providing the best customer service.
When to Prefer a Building Society
Although there are extra benefits to having an account at a bank, there are some unknown benefits to membership in building society. One, you have a more extraordinary voice in how the institution works. You will be considered a valuable member of the community. It is a private club in which everyone is equal.
That will allow you to enjoy higher interest on account savings. Any income increase is a win in a world where many are still trying to save. Many people might prefer to go to building societies because they have better options for loans, mortgages, and ISAs. Anyone who wants to protect their money can choose a building society. It is not true that society is more secure than a bank. Most societies now offer similar banking products. The critical difference lies in just how both work.
When a Bank is Preferable
Some customers may find a banking account more appealing than others. Several building societies are primarily local. That allows them to feel connected and is what makes them so popular. Many savers might view this as a limitation. Building societies have made it possible to save money and spend it flexibly and fluidly. However, banks have a global outreach, and they don’t have any restrictions or boundaries. The trade-off relies on community spirit and membership in a building society.
A wider variety of products may be available by banks. It is more likely that banks will keep on growing and developing. A bank account will be the best option for anyone who wants to take advantage of new products and services with global outreach.
How to Choose the Best Option – Bank vs Building Society
Before we can draw the guide to an end, we should consider some other points. When comparing their differences, we need to consider what the banks and building societies are trying to accomplish. Building societies are local institutions that hold money and depend on the community. The members run them, but profit is not the prime aim. However, like all private institutions, banks have a motive for profit. Banks’ prime purpose is to generate profits because of the presence of shareholders and stock listings.
Although neither of these attributes is terrible, it is possible that you have already taken a decision based on the analysis above. Banks are more flexible when it comes to global finance and products as compared to building society. The public may not see building societies as flexible, despite their nature of business and higher interest.
It is not possible to debate that bank or building society is safer one each other. All UK financial institutions have been set up and regulated to ensure that their customers’ money is protected. Some people might feel more secure using one or the other. There has been some discussion about whether the debate over building societies and banks is one of the generation divisions. Although younger people may see building societies as beneficial over the long term, do they offer as much flexibility or modernity as they need?
Conclusion
Don’t be concerned about the differences between building societies and banks. Your decision should ultimately depend upon which products attract the most. Do you want to earn high-interest savings rates? Are you a fan of flexibility in everyday banking?
One should not ignore Building societies. Both banks and societies offer many products that are worth investigating. Do you have any experiences that make one superior to the other?
