Building Societies Aiming to Win Over Savers From the Banks

By: MoneyFacts

It appears that the big banks have deserted savers, with multiple rate reductions causing their products to drop lower and lower in the market. However, building societies have used this to their advantage, by offering savers a local alternative to the mainstream banks.

Moneyfacts.co.uk has compared the savings offerings of building societies and banks and found that building societies are the irrefutable winners, as is highlighted in the table below.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:        

“It’s shocking that some of the UK’s most well-known and trusted brands are paying savers dismal rates of interest. However, building societies are stepping up to the challenge; for example, the average two-year fixed rate bond from the main banks pays 1.12%, a massive 0.58% less than what building societies are offering.

“Not only do mutuals come out on top when it comes to rates, but the gap between their deals and those from banks is getting wider, giving savers a clear indication that they may need to look away from traditional banks to get the best deal.

“There is a reluctance to save with unknown challenger brands and a lack trust to save with the big banks, so buildings societies with local stance and principles should appeal to those who are uncomfortable with investing elsewhere.

“However, building societies have not been immune to rate falls, with the whole savings market being impacted by the decimating effects of the Funding for Lending Scheme.

“There is a stark difference between what savers could earn from a building society compared with a main bank. For example, te top-paying easy access account from a mutual, which comes from Skipton Building Society, pays 1.40%. Halifax, on the other hand, offers just 0.80% - a significant 0.60% less.

“When looking for a savings account, perhaps savers should look closer to home to see if they can get a better deal than from their bank.”

Main Banks include Bank of Scotland, Barclays, Halifax, HSBC, Lloyds Bank, NatWest, Royal Bank of Scotland and Santander.

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