If you are in a life partnership with someone and have set up a home together, the little details, such as paying monthly bills and buying weekly groceries, become part of your day to day life together. Today it is almost essential for everyone to have a bank account and for couples that means deciding whether or not to open a joint bank account.
So, what are the advantages of having a joint bank account and how do they work?
Joint bank accounts
As the name suggests, joint bank accounts are current accounts which can be accessed by more than one individual, but they are not exclusively for married couples. Those in rented accommodation or shared housing often set up these accounts to manage the payment of household bills and other expenses.
There is no limit on how many account holders there can be on these accounts, but it should be remembered that every account holder will have access to the same funds. Joint accounts work by letting every authorised person have access to the shared funds, but there may be some restrictions on what exactly can be done. Always investigate whether one account holder can withdraw all the money without written consent from the other parties and how debts or overdrafts will be repaid.
It makes things simple
By having a bank account in joint names, you are able to pay household bills such as energy supplies, rent or mortgages and council tax, without dipping into your personal accounts. This helps you to keep different areas of your finances separate, allowing you to manage your money with greater ease.
It doesn’t affect your individual accounts
Just because you have a shared joint account doesn’t mean you can’t continue to run your own personal accounts. You can have your earnings paid into your personal accounts and set up a transfer that puts appropriate funds into your joint account for bills and outgoings. This means all of your expenses are covered and whatever money is left in your personal account is for you alone.
It is a statement of trust
With more and more people now living together for extended periods of time or choosing not to have a marriage ceremony, having a joint bank account can be a significant statement of mutual trust.
A joint account also means both parties have equal access to shared funds, so that if one is unable to make a payment or carry out some essential banking transaction, then the other can do so instead. One thing to remember though is that when it comes to credit reference agencies and credit ratings, any joint accounts show you as ‘linked’ with another person’s financial history and can have implications in this area.