Consumers turning to building societies instead of banks

According to recently released figures many people that were traditionally fond of placing their hard earned savings in to their favourite High Street bank accounts are now turning to building societies to fund a safe haven for their cash after losing confidence in the High Street banking system. This comes after a plethora of problems that have hit the High Street banks industry such as those experienced by the likes of Northern Rock and RBS.

Over one million additional building society accounts were said to have been opened in 2008, as many savers who wanted to try and protect their cash tried to pull their cash out of the High Street banks, which they saw as being too risky, and rushed instead to place their money in a building society account.

An official from the Building Societies Association said that the figure was impressive particularly given the low interest rates being paid on savings accounts. He said: ‘The low interest rates that we currently have reduce the incentive to save, but the popularity of building society savings accounts is such that an additional 1.2m accounts were opened over the last twelve months.’

There was a slight outflow in January of this year, but the BSA said: ‘The withdrawal represents less than 4% of the total net receipts received by building societies in 2008. It is not unusual for building societies to have a net withdrawal in January, as savers take money out of their accounts to pay for Christmas expenditure. Outflows have occurred in six Januaries out of the last ten. Adjusting for this normal seasonal factor there was a healthy net inflow of £722m, once again illustrating the popularity of building society savings accounts.’