This episode of the Your Recipe for Financial Success podcast was published on 10th September 2020. You can listen again by heading to our Episodes page, or on your favourite podcast player.

In this episode, Emma, Julie and Becky are sieving through all you need to know about banks and building societies. It’s an essential recipe for anyone looking to get a grip on their personal finance.

Episode Highlights

Banks are owned by shareholders.

Any profit the bank makes is shared between the shareholders in dividends.

A Building Society is owned by its members.

Those with a savings account or mortgage (members) own a small part of the building society, so should benefit from the profit.

Are there any risks with bank accounts and building societies?

• Interest rates don’t keep up with inflation.
• Risk of default. This is the risk the bank will run out of money and wont be able to pay you the savings interest rates they promised. The FSCS protects you and your money against this, up to the amount of £85,000.

What should you use a bank account for?

• Current accounts are ideal for holding your income. Use them for your everyday outgoings, such as the weekly shop or buying the school uniform.
• Savings accounts should be used for short-term savings, to be used over the next few years. This could be money for a summer holiday, Christmas presents or some new windows.
• Have an emergency fund to cover unexpected costs. Try and set aside 3 months worth of wages to be used only for an emergency. This could be used if you need a new boiler or find yourself out of work.

How to find the best bank or building society account

There are so many accounts on offer, and they change all the time. To find the best account to suit your need ask yourself a few questions:

1. Are you planning on using it for spending or saving?

2. Will you need instant access to your money?

Then, use a comparison site like Moneyfacts.co.uk or MoneySuperMarket to find the best option for you. Always make sure the provider of the account you choose is regulated by the FCA.

So, hopefully you have filled up on everything you need to know about bank accounts! If this has left you inspired to learn another recipe, check out our other podcasts on our episodes page.

Don’t forget about our Facebook page too where you can ask questions and join in discussions about all of our topics. We look forward to chatting all things personal finance with you!

We think you may also find this interesting: Not all banks are the same, Andy Gray, Business Growth Enabler with Nat West