How building societies work
Have you ever wondered what the difference is between a building society and a bank?
Let us tell you.
A building society is a financial institution that is owned by its members as a mutual organisation. It means that if you have an account with us, you become a member and have certain rights to vote on how the society works. Think of it like your school being the institution and if you are part of the school you are able to have a say in how you'd like the school to be run.
Banks on the other hand are normally companies listed on the stock market and are therefore owned by, and run for, their shareholders.
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 The Nottingham Building Society. Back then we concentrated on our local area, helping people buy their homes and save their money in a secure place – which we’re still doing today.
But what happens to your money once you've given it to us in your local branch? Well, when you hand your money over we put it away in a safe place. And best of all, we give you interest on every pound you save.
But what do we do with your money?
We lend your money to people who are looking to buy a house and don’t have enough to do that – we call this a mortgage. They then have to pay us back a percentage of what they have borrowed each month, plus a little bit extra until they have paid it all off.
So, if you put your money away in your account, you will earn money on it every day you have it in there. And then at the end of the year you will be able to take out your interest.