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,