What’s the difference between a bank and a building society?

If you’re choosing where to keep your money, you might wonder what really sets them apart. They offer many of the same things – like savings accounts and mortgages – but there are key differences in how they work and who they’re run for.

Here’s a simple guide to help you decide which one’s right for you.

What is a bank?

A bank is a business that looks after your money. It can help you save, borrow, or manage your day-to-day spending.

Most banks are listed on the stock exchange, which means they’re owned by shareholders. These shareholders make money when the bank makes a profit. So, part of the bank’s profits usually goes to them.

What is a building society? 

A building society does many of the same things as a bank – like offering savings accounts and mortgages. But it’s owned by its members, not shareholders. That’s why it’s often called a “mutual” organisation.

If you have a savings account or mortgage with a building society, you’re a member. That means you get a say in how it’s run – for example, by voting at the Annual General Meeting (AGM).

There are fewer building societies than banks in the UK, and many focus on serving their local area. Nationwide Building Society is the biggest and one of the few that operates across the country.

Are building societies safer than banks?

Building societies and banks are both safe places for your money. They follow the same rules to keep your money protected.

Both offer the same guarantee: if something goes wrong, you’ll get back up to £85,000 of your savings.

Why choose a bank?

• More choice – Banks often offer a wider range of products, like current accounts, credit cards, and personal loans.
• More locations – Banks usually have more branches around the country, so it can be easier to find one nearby.
• Easy online banking – Most banks have well-developed apps and websites to manage your money on the go.

Why choose a building society?

• Better rates – Because they don’t pay out to shareholders, building societies often offer higher savings rates or lower mortgage rates.
• More say – Members can vote on key decisions and have a voice in how the organisation is run.
• Personal touch – Many are local, which can mean friendlier, more personal service.

Any downsides?

For banks:

• Lower savings rates – You might not get the best return on your money, especially compared to a building society.
• Can feel less personal – Big banks can feel a bit corporate, depending on how they operate.

For building societies:

• Fewer branches – Most are regional, so you might not find them in every town (except for Nationwide).
• Fewer products – Some don’t offer current accounts or credit cards, so choice can be more limited.

Digital banking: how do they compare?

Both banks and building societies have embraced digital banking, offering online platforms and mobile apps. However, banks often provide more advanced digital features and faster adoption of new technologies.

Building societies, while improving their digital services, tend to focus on balancing technology with personal, in-branch experiences, catering to customers who value face-to-face interactions alongside online convenience.

Which one should I choose?

Banks and building societies both have their pros and cons – so the best choice depends on what you need.

Want lots of features, online tools and a branch in most towns? A bank could be the way to go.
Prefer better rates, a more local feel, or being part of a member-run organisation? A building society might suit you better.

Whichever you choose, your savings are protected up to £85,000 by the Financial Services Compensation Scheme (FSCS) – so you can feel safe either way.