What's the difference between a building society and a bank?
A building society is a financial institution that is owned by its members as a mutual organisation. This means that it isn't a commercial business and isn't responsible for making a profit for its shareholders, and if you have an account with us, you become a member and have certain rights to vote on how the society works - which is why we prefer to call you members rather than customers, as we value your input in how the society is run.
Building society vs a bank
Have you ever wondered what the difference is between a building society and a bank? Banks are normally companies listed on the stock market and are therefore owned by, and run for, their shareholders. Banks have to make a profit and pay their shareholders an annual dividend. We don't have to do that, instead we pass on our extra benefits to our members.
When building societies first started back in the 18th century they were created by groups of people who wanted to help each other buy property. Members would pay monthly subscriptions to a central pool of funds and this would then be used to build houses for the members.
We started our building society back in 1849 when Samuel Fox, a local Nottingham grocer, founded Nottingham Building Society. Back then we concentrated on our local area, helping people buy their homes and save their money in a secure place. You can read more about our history here.
We’re still doing this today but the difference is that we now offer our mortgages all over the country and some of our savings accounts can be accessed online as well as in branch which means that it doesn't matter where you live in the UK, The Nottingham will try to help you. We also have a network of branches across nine counties of the UK which means there could be a branch near you.
How do building societies work?
What happens to your money once you've given it to us in your local branch or deposited it in an online account? When you hand your money over we store it safely and will give you interest on every pound you save, meaning your money will potentially grow year on year.
How does a building society make money?
We lend the funds in savings accounts to members applying for mortgages and they are charged interest for borrowing this.
Why choose a building society over a bank?
Banks are like a business - their main priority is making sure that they can give their shareholders dividends. A building society needs to make money to continue keeping its branches open, but we're more focused on supporting our local communities and shaping the future of our members through education, grass root activities and charity work. Find out more about our Doing The Right Thing initiative.
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