Saving with Building Societies

[Coldicote]

Bank problems make me wonder why we don't hear more about building societies. Are they a safe and reliable means of saving? Would it be a good or bad thing to withdraw money from a bank and put it in a building society? Is there a way of paying bills/settling accounts through a building society? Sorry for so many questions but I guess a lot of people are thinking this way in the present financial climate. Comments and experiences appreciated.

[Ethel]

Banks and building societies give the same protection, so you are no safer nor less safe.

I have had a current account with Nationwide for over 20 years - it is exactly the same as a bank current account; can be managed online, pay direct debits, standing orders, use cheques and a debit card. It pays interest on positive balances, normally

http://www.nationwide.co.uk/current_account/de fault.htm

The best thing about it is it is free to use the cash machines abroad and the exchange rate is as good, if not better, than anywhere

http://www.nationwide.co.uk/current_account/de fault.htm

[Coldicote]

Thanks Ethel. I'll take time to study the links you have given. One more point - are building societies subject to the �50k guarantee like banks are if one collapses? Perhaps readers can offer other experiences so I'll wait a while before closing.

[Ethel]

Yes, �50k exactly the same.

[factor-fiction]

Building societies operate in a very different way to the banks, they are owned by members not shareholders, they arrangefunding differently and they haven't been exposed to the risks the banks were exposed to with the prime lending issues. They operate a much simpler and secure business model.
So I'd say they are more secure than banks. But unless the who country goes bankrupt the government will in practice compensate savers of any UK bank or building society.

[kempie]

Part of the reason we are in this financial state is the push for Building Societies to demutualise. This allowed them to act in a more profligate manner.

Consider perhaps the worst offenders (or victims???) in the current crisis: Northern Rock and Halifax. Before 1997 these were mutual societies and as such could never have exposed themselves to the levels of toxic debt that has led to their downfall.

Nationwide and Yorkshire Building Societies negotiated a temporary change to the terms of the FSCS to protect members of the societies they acquired in December 2008. The amended terms allow former members of multiple societies which merge into one to maintain multiple entitlements to FSCS protection until 30 September 2009, so (for example) a member with �50,000 in each of Nationwide, Cheshire and Derbyshire would retain �150,000 of FSCS protection for their funds in the merged Nationwide.

http://www.moneymadeclear.fsa.gov.uk/news/prod uct/bs_merger_compensation.html

[Coldicote]

Thank you all for these interesting contributions. Apparently anyone with substantial savings should divide it up so they don't have more than �50k in one place, while other people do exactly the same moving their money in the opposite direction for the same reason. What a crazy system!

[susan99]

As long as you have FSCS protection it does not matter whether your money is in a bank or building society and with interest rates falling all the time it is worth shopping around to make sure you are getting the best rates. There are still some good rates available from both banks and building societies who are covered up to the �50,000 limit including a one year fixed rate bond paying 3.90% a 90 day notice account paying 3.50% and an instant access account paying 3.25%. Worth checking the rates you are currently getting as one building society has dropped the rates for investments of under �500 on one of it's accounts to 0%

http://www.carpetbagging.co.uk/id1.html

[Coldicote]

Thank you Susan99. Surprising how much one can learn on AnswerBank.