If you’re anything like me (and if you are, I’m sorry, and have you tried therapy?) then you’re well-acquainted with those online tables of the top savings accounts. But have you considered smaller building societies that might not make these lists?
We all know the drill in 2024. You need somewhere to park your cash. An account with an interest rate that sees your stash nibbled at rather than swallowed up by the Inflation Monster.
My personal go-to are the tables updated by the Money Saving Expert team. But there are lots of others. Search for ‘top savings rates’, and you’ll get up-to-date results.
The top scorers are usually online challenger banks. Mostly they’re absolutely fine. Just check any potential candidate has the full FSCS protection of £85,000 – especially if it sounds like something Del Boy threw together in a get-rich-quick scheme.
(“Rodders, what’ll we call our bank? Monzo? Nah – how about Pockit?”)
However I’m going to make the case that you should consider your local building society.
Rate expectations
National building societies (BS) are included in those Best Buy tables, alongside banks new and old.
For instance, top BS picks as I write include…
- Leeds BS (paying 4.67%)
- Yorkshire BS (paying 4.35%)
…which are respectable enough, though they can’t compete with the likes of Trading 212 and Moneybox, which both tout 5.17% right now. (T&Cs apply with all these accounts, and that Trading 212 link is monetised so The Investor may be able to buy an M&S Meal Deal this weekend if you sign-up!)
What the tables might not show you is the best rate offered by your local building society.
And you could be surprised at just how competitive these can be.
What are building societies?
I think of building societies as slightly more cuddly banks.
Rather than being run for the benefit of shareholders, as banks are, building societies are accountable to their members. And the members are their customers.
The first society was formed in 1775 in Birmingham, with recognition of the nascent industry coming with The Regulation of Benefit Building Societies Act in 1836. The next 200-odd years saw more legislation and regulation, with the sector hitting its high-water mark in 1986. That year The New Building Societies Act gave them the option to become banks. Over the next few years many did just that.
So don’t be fooled by a local-sounding name from yesteryear – like a fancy surname retained since the Norman conquest – because you may be looking at a bank in sheep’s clothing.
For example, when I was a kid in North East England we had accounts with the Halifax Building Society. But while I was a teenager and wasn’t paying attention, Halifax went to the dark side. It ‘demutualised’ and turned into a bank. Others followed suit.
However not all building societies did the (mis) deed and there are plenty left today.
Surviving building societies tend to have a local focus. They usually have a town or city in their name.
Again though, not always. Nationwide Building Society is, as its name suggests, a nationwide mega-building society. And while the Teachers Building Society says it reserves its best rates specifically for teachers, anyone else is also welcome to open an account.
Beware the bankers
I’m not saying all banks are sharks nor that all building societies are cuddly teddy bears. That’s not true.
In fact I tend to err on the side of believing that every big organisation is out to get me.
I’m just saying that these days my local Halifax branch won’t let you go to a counter unless you’ve first run the gauntlet of three different iPad-wielding staff members – each time announcing your financial business to every curious onlooker perched nearby on the soft-play sofas.
My mother’s been trying to make it to the counter of Halifax for two years.
Kafka would be taking notes.
What are the advantages of building societies?
Sometimes building societies have savings rates that equal the top online banks, and mortgage offerings that are just as good or better than other brokers. Other times they come close.
My point is they are definitely worth checking out. Yet they don’t often show up in comparison sites or tables. You have to do the leg-work yourself.
The good news is that you don’t always have to live nearby. These days most building societies have useful websites. Some – like Yorkshire BS and Leeds BS – enable you to open accounts online even if you don’t live in the area.
And yet… there’s also a case for getting up from your sofa (did I hear you actually gasp there?) and wandering along to your local high street to have a chat with the building society folks.
Assuming you a) have a local high street that isn’t derelict and b) have a building society with a building.
Field report
The last time I went out exploring – to open a cash ISA at my local building society – I was armed with info from its website, only to be told: “Oh, those were yesterday’s figures. This morning’s issue of the account has a higher interest rate”.
So I came out happier than I expected. A rare situation in dealing with banks, I’ve found.
They sometimes chat to you, too. You can go in, sit in the warm for a bit, and talk to someone about money. There’s a coffee machine in the corner. They’ll occasionally offer you a cup while you wait.
People really seem happier in my local building society. It’s like a weird banking utopia.
Do building societies have any disadvantages compared to banks?
Building societies don’t have as much to offer as banks. They’ll do savings accounts (including ISAs) and mortgages, but many don’t do more than that.
If you want a current account and lots of additional features, you’ll probably have to look elsewhere.
Building societies aren’t usually a one-stop-shop then. They’re more targeted at a particular strand of your financial management.
Also, their online offerings can be pretty limited. You might be able to check your account online, for instance, but not actually move your money around much without going into a branch. For some people that’s a huge disadvantage.
However I find that the relative simplicity of building societies works well for me in some situations.
For instance, last month I gave my 12-year-old son his first prepaid card. He was off on a school trip abroad – don’t even get me started on how much that cost – to a country that doesn’t use cash very much. The kids were advised to take a card for buying snacks and souvenirs.
Naturally getting my son equipped wasn’t a smooth process. I had to get a card for myself too, so that I had a parent account for the child account. (And ever since I did, it’s been spamming me with ads for ‘easy investing’ and ‘want to buy gold?’).
But eventually both cards were set up. My son now has a card loaded with donations from his grandparents to take on his trip.
Slower and steadier saving and spending
The worrying thing is that my son loves his card. He carries it everywhere he goes. I think he’d sleep with it if I let him.
Sometimes he stops by McDonalds on his way home from school to buy a drink just because, he says, “It’s fun to use the card”.
Okay, I can see why. You select something on the big shiny ordering machine, tap your card, and like magic somebody brings you a large Sprite Zero. That was science fiction when I was twelve.
But the money doesn’t seem real to him. The can of Sprite does, but the cash that paid for it is just a number that changes on a phone screen. For those of us who are old and grey (just a bit grey in my case, honest), it’s easy to make the connection. But for kids growing up in an increasingly virtual world, it’s different.
The building society approach counters that. It slows things down.
If his grandmother gives my son a £20 note, I’ll take him to the building society with his passbook. He hands in the £20, his book gets stamped, and he can see the physical money transferred to a number on the page. If he wants to do anything with that money, he has to go into the building society and ask.
There are levels of checks that slow down the immediacy of spending. As a parent I like that a lot.
Why I like to support my building society
There are other benefits to using your local building society
As already mentioned, in my neighbourhood the benefit is physical branches. My local BS – Newcastle Building Society, if you’re interested – hasn’t just hung on to a high street presence where banks have fled. It’s actually expanding its operations, opening new physical branches around the region.
Then there’s the community side.
Building societies can offer some interesting services. My local branch, for instance, provides a meeting room that you can book free of charge. I was so impressed by the offer that I immediately started trying to think of people I could assemble for an official meeting of some kind. (It didn’t work, of course – there’s nobody in my town who wants to meet with me except my cousins. And I’ve been crossing the street to avoid them for years.)
Now, I don’t know anything about high-level finance. I’m just a regular person in a regular town, doing regular shopping in a run-down high street that has more nail bars than banks.
But it seems to me that building societies are becoming increasingly attractive to people because they’re looking at what their customers want, rather than trying to tell their customers what they should want.
BSs: no BS
There’s no denying I’m a dinosaur about a lot of things.
I don’t have the new Vanguard app. (Why would I want to check my investments on the bus?)
I resent the ubiquity of QR codes. (If I have to scan a QR code for your information, then I don’t want your information).
My approach to change can be best described as ‘grumpy’.
So maybe I’m missing the advantages of our kids being born digital. Perhaps my views will change in a few years, when newer and more terrifying forms of progress make tappable cards look like Victorian slates. Maybe I’m alone in liking a passbook that can be stamped.
But in this age of online everything, in which you need two-factor authentication to change your socks, I find it strangely comforting to have an account that tucks my money away without any online tinkering.
I don’t think that I am alone. My building society has big posters advertising their use of passbooks, and apparently they attract a lot of new customers. My parents moved their savings from the bank to a building society when their bank phased out passbooks.
Lots of regular people resent it when the relentless march of progress whisks away a system that worked for them.
Anybody else still miss video tapes? Nobody?
Alright, I’m a dinosaur. But there are other dinosaurs out there too.
And in the dinosaur community, building societies are our happy place.
@all — I’m delighted today to welcome Squirrel to the Monevator team! Hopefully this is the first of many articles from her nest in the North East of England.
If you’ve not read Squirrel’s origin story yet then do check it out:
https://monevator.com/fire-side-chat-secret-squirrel/
Welcome Squirrel – great first article and glad you’re part of the Monevator stable now!
I took hate (and feel sorry for) the iPad wielding gatekeepers at every “enhanced” branch these days, especially when they ask you if you’ve checked their website – No, I just wanted to pop in for a game of twenty questions?!
Nationwide, certainly a BS, has a good online operation and app that allow you to move money in, out and between accounts. I maintain an account there, not just for savings, but for that inevitable day when my mainstream bank screws up its IT and goes dark for a week.
I was just wondering the other day if anybody still used passbooks. Also finally threw away the video recorder. That was hard.
Anyway, love the article. It prompted a mental image of a historic old building surrounded by gleaming skyscrapers in some fast-changing mega-city.
Squirrel, welcome to the Monevator team – great first article!
I have accounts with Nationwide, as do my wife and grown-up sons. It makes the process of moving money around very simple, through strangely the movement is always in one direction! And as Chris said, Nationwide is also a very useful backup for when your mainstream bank screws up. Though to be fair, First Direct has never let me down in 30 years of banking with them.
@The Investor “… from her DREY in the North East..” surely?
@Chris #3
Yep Nationwide for me too, for my cash reserve – in a long-held saver type account which I cling to like a limpet for its always enhanced interest rate. I use one of the “high street” banks for my current account, and switch any short-term surplus or requirement seamlessly and immediately betwixt one account and the other.
I have a debit card but I’ve never had a credit card, and would never want one. I’m a minimalist.
This is just perfect- summed it up nicely. If Megacorp CBA to spend the money to print their advertising fluff on a poster or stick it on a screen I CBA to read it 😉 Particularly as unlike everyone else on this septic isle I don’t routinely tote a fondleslab so I couldn’t use their QR code even if I wanted to. I look forward to more curmudgeonly writings from Squirrel!
Here is the current full listing of all building societies: http://www.buildingsociety.com/current.shtml
@Squirrel
There is a thriving colony of sciurus carolinensis which inhabits a group of large trees near to my garden; irrespective of gender I call them all Cyril – see what I did there?
As ever at this time of the year, they have been energetically trimming and burying acorns from my neighbour’s evergreen oak in my front and back lawns. Also as ever, the local wood pigeons then remove the prepared acorns from their always shallow graves and enjoy a gastronomic feast.
All is well though, because once Cyril and pals have finished burying they remain active throughout the winter and never actually seem to hibernate, nor have I ever seen them attempt to locate and exhume anything in the spring.
The pigeons are always plump and clearly thriving!
Nice (second maybe) article.
I too use Nationwide as an intermediate option and made my mum open an account there when we were handling my dad’s estate. Sensibly as it turns out as her bank, Barclays has retreated entirely from her town and is barely open in the nearest alternate. The staff in her branch are brilliant at dealing with the older customer (who it seems are only increasing as other banks and BS shut physical branches) even if they are bit too OTT on money transfer security (like I had to physically go down to the branch with her before they would execute a transfer to Vanguard and show them her account logged in on a phone because they’d never heard of it).
I can see the benefit for kids of old school BS passbooks etc as to money education but it depends on the kid. My younger niece is very careful with her Revolut card as she fundamentally is conscious of money (how else is she going to be able to buy that house with a paddock and stable – let her dream it might motivate her through school and university) while the elder will be surprised after an afternoon of whim purchases at Primark and smoothies etc when her card goes bump.
Wonderful! I also hate most modern things – everything is getting dumbed down and quality is disappearing (both in products and services). The VG app is rubbish – they should stick to a website. QR codes are from the devil. I want to go back 20-30 years to the good old days!
“fondleslab” – love it, it’s just perfect…. Thank you @Ermine, you’ve made my day.
@all — The gist of comments well summed up here: “I want to go back 20-30 years to the good old days!”
Seems my hope that recruiting the wonderful @Squirrel to boost Monevator’s appeal to a younger demographic may need fine-tuning 😉 😉
Welcome from me to The Squirel. Definitely a helpful addition to the regular Monevator themes.
There’s something good about supporting local organisations. And diversity of providers is probably a good thing, as well.
But I’m not sure I’d agree that building societies make it a priority to serve their members. It’s not hard to find examples of them doing otherwise eg creating new accounts, with favourable interest rates, whilst leaving existing customers in outmoded accounts. And not informing existing customers, when these new accounts get launched, even leaving such info out of the mailshots, in which they emphasise commitment to customers etc etc.
Nationwide seems to identify a sub-class of Members, who receive quite a substantial annual cash bonus; presumably these are the Members that the organisation finds to be profitable.
The apparent refusal of some building societies to send out annual interest statements, unless you contact them to ask specifically, would seem to be another practice that differentiates them from banks.
And the history of the last few years of Manchester Building Society, prior to it finally getting taken over by one of the larger societies, illustrates both the problems that can arise, with a very small building society and the apparently limited powers of the regulator, to put things right.
Maybe in a future post, it might be worthwhile to have a closer look at PIBS?
@Squirrel
Demutualisation: Yes, I recall that being a thing back in the mid-90s. The driver for most folk to vote in favour would appear to have been the prospect of receiving a payout of some amount or other. I never received one but I recall a colleague setting up accounts with various building societies in the hope that they would soon announce an intention to demutualise.
Teachers Building Society: as a resident of one of those three counties, I looked at their website. However, I could find no mention of a geographical restriction, just a binary split of accounts/information into teachers and everyone else. Curious to know where you got your info?
I have a slightly cynical view of the ‘mutual’ bit. As I recall, Nationwide has long been the subject of criticism over the remuneration of directors, and the inability of members to effect any real influence over that.
As I also recall, from the recession of 1991’ish.., Abbey National BS ( their logo, a couple walking, underneath an umbrella ), now Santander, gained a reputation for being one of the most aggressive of mortgage lenders in going for foreclosure when customers ran into difficulties.
My late mother had an account with a “real” building society with an actual branch (not the one with the local name, that had merged with a big bank years before) which worked brilliantly for her: not only was she happy with passbook operation but as she got older she would drop in for a break when shopping, getting a sit down and a free cup of tea.
And they made things easy when she needed me to activate the Power of Attorney she had set up, and later when sorting out probate.
I have an account with the local building society here – I think it only has the one actual branch – which helps mean my cash eggs aren’t all in the same basket, and gives a place where I can pay in a cheque on the rare occasion someone sends me one.
> to boost Monevator’s appeal to a younger demographic may need fine-tuning
With all due respect to you and Squirrel I’m not absolutely sure you’d start down that track with a paean to bricks’n’mortar building societies rather than a homily to the virtues of a fintech app (on your fondleslab, natch) or pehaps rolling it all on crypto. The former being the Captain Sensible method of doing it in the modern world, the latter being the equivalent of the National Lottery option.
Not sure you gave Squirrel a youth-friendly brief, but jolly good fun for some of us 😉
Analogue is well lit, innit?
@all – Thanks for the warm welcome! Nice to meet other old-fashioned curmudgeons – or like me, curmudgeons-in-training!
@TI – I’m quite sure my combination of technophobia and nostalgia will appeal to the yoof. Really.
@Curlew – you’re right, I can’t find reference to the counties either. I was going by my recollection of the restrictions when I briefly had an account with the Teachers, many years back!
@ermine – the ‘fondleslab’ is brilliant. My son will be horrified when I start calling it that!
@Factor – my local Cyril and pals are either completely chaotic in their nut-burying, or they have a plan so complex that I haven’t yet figured it out!
Good to see you joining the Monevator team, @Squirrel.
Nationwide was my first mortgage provider so I kept a savings account with them, and then maybe about 15 years ago, I opened a current account with them as a ‘back up’. The £100 members payouts are appreciated, its app and website aren’t as slick as others but I can do what I need to do on it.
Wonderful article Squirrel, and I’m all for a bit of financial nostalgia! I’m old enough that when I got my mortgage you could, for all intents and purposes, only get one from a building society. In those days it was helpful to establish a savings record with the building society to support your mortgage application. I chose the then large Leeds Permanent Building Society (not to be confused with the existing Leeds Building Society, which is the former Leeds & Holbeck Building Society and a more regional operation). My choice was for three reasons: it was a Yorkshire society and I am a proud Yorkshireman, even though living elsewhere; they had decent rates on regular savings accounts; and, finally, they had a branch in my town even though it was many miles from Leeds, or indeed, Yorkshire.
I was on my way to paying off my mortgage but I hung on long enough for the merger of Leeds Permanent with Halifax and the subsequent demutualisation of Halifax to receive my shares. I got a further boost to my shares as the company Sharesave scheme I was subscribing to at the time was using Halifax Building Society for the savings.
I still have a Cash ISA (a legacy from a TESSA, after many transfers) with National Counties Building Society, which likes to trade nowadays as the Family Building Society. This is based in Epsom, Surrey – again many miles from my home.
I suggest checking out Hargreaves Lansdown’s “Active Savings” account.
This lets you switch between accounts (from many different banks and building societies) just by specifying an amount and then a single click
You can choose easy access all the way up to 5 year fixes and when a fix expires it automatically goes back into your “cash hub” – which you can choose to put in any easy access account – ready to be sent to a difference savings account if required.
Not a great explanation but easy access account with the best interest is currently 4.61% AER. You can take money out or put more in, as I said, in a single click. It’s revolutionised our savings!!
Just not sure if you need to be a HL customer to use it… we have some old accounts there…
I’m pleased to see you will be writing some posts for Monevator – and I’m not young either – another of the old curmudgeon set (as well as a grumpy dinosaur – but that just comes naturally with age).
I’m with you (and ermine) on all the modern tech (fondleslabs etc), QR codes and apps as well for me. I don’t even have a smartphone (just one of the dumb numbers). I use laptop at home for my banking and stuff with all the 2-FA I can muster. Like you I don’t want QR codes for anything and many scams are connected to scanning these fakesters. Likewise apps – many of the banking/investing ones I’ve seen others have seem quite rubbish/trivial anyway and don’t seem to be that functional, IMO, and why exactly would you want to do any banking on a bus or coffee shop or anywhere else for that matter – where anyone could be watching you (or a hidden camera could be watching you). And I just don’t understand why some people choose to log into sensitive accounts using public wi-fi. Some just ask for trouble and then demand their money back when it all goes t*ts up.
I’ve always been big on saving and for the majority of my life that was in savings accounts. I didn’t come to investing really until late.
So I’ve had many hundreds of building society and bank savings accounts over the years – I’m a rate tart and if my rates drop by too much, “I’m out” and onto the next. This is because I need to have the best rates as I hold quite a large cash pot (don’t tell the other writers on this site though – just keep this to yourself or will get a telling off and maybe another post on bonds/commodities/gold!) – but I only have a 2 asset portfolio – cash & equities (3 with my house if that counts as property). I know I shouldn’t but I like the simplicity but will probably end up opening the loft hatch and attaching my noose when the next huge “bear” comes along.
I don’t really find it a bind to open another account – it only takes ten minutes anyhow online. Also use cash savings platforms such as Raisin if they offer a good rate as then don’t have to go through the account opening every time – just choose an account with them and they do it. Also another ploy – if it is a BS or bank that often offer decent paying accounts but the rate drops on my current one and jump ship – is to not close that account but just leave min balance to keep open with £1 or £100 (or sometimes nothing) and then when another better payer with them comes along then just switch straight to that before closing the laggard and so then negates having to go through the whole account opening again. Just have a lot of open accounts with nothing much in at any one time but not really a problem for me.
You mentioned Newcastle BS as your local – I’ve still got an online account now with them that I opened some time ago – it pays the BoE base rate minus 0.7% I believe although I don’t have much with them now as I jumped ship to better paying account. I find most building societies have good customer service as opposed to most banks which are not so good except a few. I have had Nationwide accounts for years (including current accounts) and find them good. Like the savings accounts just for members – have an 18 month one now, pays around 5.5% I think from memory – although no longer available.
Nice to see you’re a fellow Northerner in the North East of England. I’m slightly lower down (in E. Yorkshire). Keep up the good work now you’re over at Monevator Towers and look forward to reading your future posts. All the best to you Squirrel.
Thank you for an interesting post. I’ve funds just about to come off a fixed rate deal so this is rather timely.
I also use Nationwide and hope their £100 bonus continues. Also use HL Active Savings from time to time to deposit funds elsewhere depending on rates. I dont have any other dealings with them.
The image at the top of the article reminded me of the Town & Country Building Society squirrel mascot, very fond memories!
My first mortgage was with the Britannia and, after jumping through many hoops, they treated me very well. In the noughties they went completely off the rails trying to compete with Northern Rock’s originate and securitise model and sadly came to an end.
Let me give a toot for our local BSs: the Cambridge, the Saffron, and the Suffolk. All have real merits. A few years ago the Nottingham tried to expand into our area – Huntingdon, specifically – but that didn’t succeed. Pity; the account we opened with them was excellent.
Perhaps the branch was a victim of the Great Covid Fiasco. On the other hand branches close all the time: we used to have a Skipton but it too evaporated.
I have a particular reason to favour passbook accounts – when I shuffle off they will make it easy for my widow to see what’s where. Accurate transfer of log-in procedures is not easy as you get older.
And another thing: children and money cards. We gave our young daughter a charge card for the local bookshop and stipulated a monthly budget. Then when she and her pals were out in town on a Saturday some would show off their cards by buying treats. She would lead the gang into the bookshop and ask their advice on what she should buy. And they’d all fall to reading furiously.
In other words it worked a treat.
Well done Squirrel, welcome to the fold. Our experience of building society demutualisation was mixed. With Abbey, we spent the money on a good camera, which was a sound investment. With Bradford & Bingley and Northern Rock, we decided to let those shares grow, taking only occasional interest. One day they were worth £22,000, then all of a sudden, they were worthless!! That was 2008 of course. No wonder it took us till 2018 to go back into the stock market. Not that 2018 was a great year, and then there was Covid and 2022. But, with Monevator’s help, we’ve hung on in there and the snowball is rolling. As for modern day building societies, we’ve previously used regular saver accounts, stashing away money in places like the Furness and Loughborough BSs, compounding out of sight until the day you take the trouble to update the passbook and see just how much is in there. Nowadays though, we use things like Chip and T212. Sadly, no more passbook surprises for us.
There actually is a “Bank of Squirrel” of sorts, with a very bushy-tailed squirrel as their logo, but they don’t operate in the UK, sadly – “Caisse d’Épargne” in France:
https://en.wikipedia.org/wiki/Groupe_Caisse_d%27%C3%89pargne
Holy moly, *Squirrel* joining the Monevator team? This is fantastic news and was not on my bingo card!!
Absolutely loved the FIRE-side chat, really looking forward to reading this over a cup of tea and more of your writing in the future. Welcome!
Let us hope that the exterminationist agents of the US federal government don’t decide to euthanise this particular squirrel.
Thank you Squirrel. I’ve used local BS for good effect. One for kids’ pass book accounts so they can see/feel the money a bit better (and reduce access as its for saving over current account-type use). I also use another for Junior Cash ISAs. The rates are generally competitive. One aims to stay above the national average rate of building societies.
Secondary benefit is I’m helping to support my local high street as the Lloyd’s and Halifax are both pulling out (HSBC and Barclays already gone). Soon we’ll only have building societies left.
I’m the treasurer and a trustee of a couple of charities. The Nationwide is one of the few institutions of any type which allow charities to open an account and pay decent-ish rates (currently 2% on instant, 4.1% on 95-day), so I am generously disposed towards them.
Like all financial institutions though they can’t just leave us alone, and from time to time threaten to close our account if we don’t submit to their KYC c**p. It’s astonishingly difficult and time-consuming to “verify” multiple Trustees, who are invariably time-pressed volunteers, often geographically dispersed and sometimes quite elderly. It didn’t go so well last time and I complained to the CEO about some indignities suffered in-branch trying to comply … and were given £250 compensation.
I got £500 from Lloyds a few years ago when they *really* ballsed up an incoming payment. We’ll be able to stop other fundraising soon at this rate … 😉