What are joint accounts?
Joint accounts are bank accounts that two people (and even up to four people) equally access. Joint account holders can all deposit and withdrawal money. They can also all make payments from the joint account. All parties can also view transactions and hold a debit card for that account.
Should we open a joint account?
Opening a joint account is actually a big deal.
For many, this is part of a maturing relationship. The decision is often made alongside big life events like moving in with a partner, marriage and having a child.
Other less traditional reasons include managing shared costs with a flatmate. Or financial support with a relative.
Whatever the reason, you should never feel forced into opening one or that you have to.
Opening a joint bank account is not for everyone. Joint accounts for couples are popular, but many married couples do not have one – everyone must decide this for themselves.
Are we ready to open a joint account?
While there are few barriers to opening a joint account, you should not open one until you and all partners have had honest conversations about it.
You will want to discuss expectations for the account. This includes how much money will be deposited into the account by who and when. Discuss exactly what joint money will and won’t be used to pay for. Also, discuss saving goals and budget requirements.
A word of advice: don’t be shy about setting ground rules.
Establish trust
Trust between you and your join account partner is important. So be sure you and your partner(s) are on the same page about why the account is set up and how it will be used.
If you and your partner have a falling out, assets left in the joint account are vulnerable. One person could withdraw it all without notice. Be sure you trust each other not to leave the other high and dry.
And you should feel comfortable with your partner’s financial responsibility. If one person runs up debt in the account, all account holders are equally responsible in the eyes of the banks and credit scoring agencies.
Credit scores
Just as important is to consider and discuss the impact of joint accounts on credit scores. When credit scoring agencies review your finances any associations on joint accounts will be noted.
If your partner has a lower credit score -- meaning they have demonstrated poor financial responsibility -- it could negatively impact your score.
The opposite is also true, by opening a joint savings account with someone who has a higher credit score can give your credit score a boost. Sometimes this is intentionally done to help a lower-scoring person improve their standing.
How to be a responsible joint-account holder
Just like your personal bank account, responsibility involves keeping track of your expenses. This helps you ensure the joint account is financially healthy, and to keep an eye out for suspicious activity.
Make it easy for yourself with a free open banking application like Money Dashboard. This allows you to sync all your bank accounts – including joint accounts – so you can view transactions in one place. You can also set spending and saving goals and get alerts when they are going off course.
You and your partner may also want to brush up on budgeting tips for couples. For example, how to save up for a baby.
How to open a joint bank account
To open a joint account, you can apply online or in a branch of a bank. You can also set up joint accounts with digital banks like Starling and Monzo fairly quickly. Have your personal details, ID and proof of address ready.
To close a joint account, the bank usually wants an agreement in writing from all the account holders. They may also want a signed agreement about how the remaining funds are divided.
If you and your partner split ways you must close the account. Even if there is nothing in it, close it for the sake of your financial protection.
