Money Insider: Mutuals still have a vital role to play

The building society landscape may have changed dramatically over the last 25 years due to mergers and takeovers, but even though the number of mutuals and the size of the overall branch network may have shrunk, it still has plenty to offer.

Back in 1986 there were 151 building societies with over 6,900 branches, while today the remaining 48 societies have fewer than 1,700 branches between them.

The latest in a long line of changes will see Norwich & Peterborough Building Society (N&P) merge with Yorkshire Building Society subject to members' approval on 22 August.

N&P, established way back in 1860, has been a key player in financial services in the east of England. However recent issues surrounding mis-selling of Keydata investments to some 3,000 customers led to the society having to make a provision of £57m, resulting in an annual pre-tax loss of £48.9m for 2010.

The current 423,000 N&P members have little to fear from the merger as they will become part of the second biggest mutual in the UK, will retain the separate N&P brand and have a promise that the branch network will remain intact for at least two years.

Undoubtedly there will be further mergers in the years ahead; however the bigger, stronger mutuals that are left will be in a better position to compete with their high-street rivals.

The top three building societies measured by assets are Nationwide (£190bn), Yorkshire (£33bn) and Coventry (£25bn), and even though the mutual sector may end up being represented by a smaller number of these "super societies", it still has a vital role to play in the UK.

As well as being an integral part of many local communities, mutuals can compete on rates too. The savings and mortgage best-buy tables include a very strong representation from the building society sector.

In fact, having reviewed the tables this morning, they show that more than 40 per cent of the most competitive fixed rate savings bonds are provided by mutuals.

Fixed-rate mortgages is an area where building societies are even more dominant, offering the majority of best-buy rates across fixed terms ranging from two to five years, and not just at 75 per cent loan to value either.

The Government hasn't helped the mutuals' cause in recent years, with HM Treasury-backed NS&I making aggressive forays into the short-term fixed rate bonds market. With new issues of NS&I index-linked savings due to be released later this year, let's just hope the pricing is sensible and that it doesn't result in further large swathes of retail savings balances walking out of regional building society branches.

The personal finance industry relies on competition, innovative products and high levels of customer service, all of which building societies continue to bring to the table, and I'm sure will continue to do for years to come.

It would be a sad day if we were left without a strong building society presence supporting loyal members and local communities across the country. It would leave us having to deal with faceless banks, many of which are more interested in the next sale than improving levels of customer service.

Credit cards: Don't forget balance transfer opportunity

Recent research reveals that many people are currently paying off debt rather than paying into a savings account, and with savings rates at such low levels it's a sensible strategy to follow.

If you've got a good credit record, it makes perfect financial sense to take advantage of some of the longest 0 per cent balance transfer deals ever launched as a way of making bigger inroads into your debt and paying it off even sooner.

For example, if you have a £5,000 balance on your plastic and are paying a market average rate of 18 per cent APR you'll end up paying £1,266 in interest charges over the course of 20 months.

If however you switch your balance to the Barclaycard 20-month interest-free deal your only outlay is a one-off balance transfer fee of 3.2 per cent, which comes to £160 – so you can see it's a "no-brainer".

The credit card market remains extremely competitive, but only for those with an excellent credit history. Unfortunately if you've missed a couple of repayments or failed to make them on time, you're likely to be excluded from these latest 0 per cent and low rate offers.

If you've already got a Barclaycard you won't be able to switch to the 20-month offer. However there are 18-month balance transfer deals from both MBNA and Virgin, and 17 months courtesy of Nationwide Building Society.

Credit cards may be viewed as the Devil's work by some, but if you're disciplined with your plastic, they offer a great way of reducing your interest charges.

Andrew Hagger, Moneynet.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

    Reach Volunteering: Trustees with Finance, Fundraising and IT skills

    Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
    Markus Persson: If being that rich is so bad, why not just give it all away?

    That's a bit rich

    The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
    Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

    Coleman on course to end half a century of hurt for Wales

    Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
    Rugby World Cup 2015: The tournament's forgotten XV

    Forgotten XV of the rugby World Cup

    Now the squads are out, Chris Hewett picks a side of stars who missed the cut
    A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

    Britain's Atlantis

    Scientific study beneath North Sea could revolutionise how we see the past
    The Queen has 'done and said nothing that anybody will remember,' says Starkey

    The Queen has 'done and said nothing that anybody will remember'

    David Starkey's assessment
    Oliver Sacks said his life has been 'an enormous privilege and adventure'

    'An enormous privilege and adventure'

    Oliver Sacks writing about his life
    'Gibraltar is British, and it is going to stay British forever'

    'Gibraltar is British, and it is going to stay British forever'

    The Rock's Chief Minister hits back at Spanish government's 'lies'
    Britain is still addicted to 'dirty coal'

    Britain still addicted to 'dirty' coal

    Biggest energy suppliers are more dependent on fossil fuel than a decade ago