Which? Money experts round up 10 ways you can bypass high-street banks and manage your money alternatively.
1. Credit unions
Credit Unions let people in a shared local community save and borrow money with each other. There are around 450 credit unions in the UK. They are owned by members and regulated by the Financial Services Authority. Read the Which? online guide to credit unions for more information, and go to www.findyourcreditunion.co.uk or call 0161 832 3694 to find the one that’s nearest to you.
2. Friendly societies
In our last Which? Money survey, these were the high-street banking alternatives most members were familiar with.
3. Charity Bank
Charity Bank is the only regulated UK bank that is also a registered charity. It uses its investments and deposits to finance charities and other social enterprises. It’s not a full service bank, but provides borrowing and savings facilities including a Best Rate cash Isa.
4. Building societies
Building societies differ from banks in that they don’t have shareholders. They often feature in our Best Rate tables; Nationwide is a Which? Recommended Provider for bank accounts and Coventry and Yorkshire are Which? Recommended Providers for savings.
National Savings & Investments (NS&I) is an alternative home for your savings as it offers a wide range of options. The best known NS&I savings vehicle is premium bonds, but NS&I also offers Isas, equity and income bonds and index-linked (inflation-proof) savings certificates.
6. Ethical banks
A report from 2010 showed that £19.2bn was saved or invested by UK consumers with ethical finance providers. They ensure that all deposits are used to deliver a positive social and cultural impact. Visit our expert guide to ethical investing for more details.
7. Islamic banking
The Islamic system of banking means there is no payment of interest on deposits or loans, and a strict code on where money will be invested must be adhered to. The banks cater to customers of all faiths. For further information, visit www.islamic-bank.com.
8. Peer-to-peer lending
A relatively new alternative to high-street loans, the unique point of peer-to-peer loans (P2P) is that the websites who offer them allow borrowing between consumers.
Companies that specialise in peer-to-peer lending include Zopa.com, Yes-Secure.com, Ratesetter.com, Funding-circle.com and Quackle.co.uk.
These really should be a last resort. Pawnbrokers lend you money in return for an item you pledge. In a recent Which? investigation, we found that they charged an average loan rate of 140%.
10. Internet accounts
Our top Recommended Providers for current accounts are internet-only – First Direct and Smile. They are owned by HSBC and Co-operative respectively, but for service our members find them unbeatable. See the Which? guide to finding the right bank account to find out why.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.