When working towards similar financial goals as a couple, a joint account could be the best option for both parties.
A joint account can be either a transaction or savings account that is held in two or more names. You can set it up as either: both parties need to sign to approve transactions, or only one account holder has to sign.
These types of accounts are generally used by family members, couples or business partners who trust each other. This is because anyone who is nominated on the account can use the money in any way they see fit. You can compare accounts that allow more than two joint account holders here.
How do savings accounts for couples work?
The account can be opened for the long-term, like an account a couple opens to have their salaries deposited into, or it can be a temporary arrangement to help two people achieve a short-term savings goal such as an overseas holiday.
What are the types of joint bank accounts?
Generally there are two types of joint accounts, namely where both parties have to sign and where either party can sign.
Both parties required to sign
If you would like peace of mind, this is a good option to ensure you know what is happening with the money at all times. This type of joint account requires both account holders to sign for the approval of a transaction for it to be performed. This is popular with business accounts.
However, you have to decide whether the added level of security is required. If you trust your partner implicitly, this may not be the best option as it can make the account difficult to access and less convenient. For example, if you're away and your partner needs money urgently, he or she cannot make any withdrawals or payments without your signature.
Either parties able to sign
When opening a joint account where either party can sign, anyone named on the account can perform a transaction on their own, without the knowledge or approval of the other person. In other words, the level of security is lower than the previous option because the other account holder can spend money without you being in agreement or even knowing about it.
On the other hand, it is a far more flexible option and can make life much easier. For example, a couple may use this account to buy household groceries and pay rent and other bills - needing approval each time you do these things could become very frustrating very quickly.Back to top
Who are joint bank accounts suitable for?
A joint bank account is a good idea for people who really trust each other, and have regular joint payments. It could be your sister, parent or a partner. Opening a joint account with someone you barely know or have just met, even if it's your romantic partner or housemate, is most likely not a good idea.
Case study: Steve and Melissa
Steve and Melissa have been together 5 years and have decided to open a joint bank account. They have both changed their details with payroll so they can get their salaries paid into the joint bank account. The main reason behind this is so Melissa can handle any bill payments while Steve is on the road, as he travels a lot for work.
They decide to open an ING DIRECT Orange Everyday Account online. Steve and Melissa both make incidental purchases, for example Melissa often meets friends for coffee while Steve often has a drink at the pub after work. Neither mind the others spending as long as all the bills are paid, and that they're still saving their agreed amount each month.
Should I open a joint bank account with my partner?
If you're in a long-term relationship and you trust your significant other, a joint bank account can be an excellent tool to help you manage your money effectively and achieve financial goals together. Firstly, you won't have to pay the fees twice and, secondly, drawing up a budget and sticking to it might be easier when you both pool your money together. Furthermore, if one of you has to be away for an extended time frame, the other person can take care of all the financial aspects.
The key to success of a joint bank accounts is trust. It is important that both account holders establish clear ground rules and the lines of communication are not only open but used often. If you have even the smallest doubt about your partner, then don't open a joint bank account and give them full access to your money. One option could be to create a joint account where you deposit a limited amount of funds, while keeping your primary salary account separate and in your name only.Back to top
How do I compare joint bank accounts?
The easiest way to find a joint bank account is to use the financial comparison tool above to filter accounts according to your needs. We've done all the hard work for you and will allow you to compare most of the offerings available on the market on one page.
Remember, as with any bank account, you'll want to find a bank that offers joint bank accounts with as few fees as possible. In fact, it's preferable to find one that won't charge you transaction fees, that will give you easy access to your funds and that will offer a reasonably good interest rate on the funds you have in your account.
Coordinating your schedules so you're both available at the same time to open the account would be a nightmare - the majority of banks will let you enter all the information online, saving you a lot of time.
What are the pros and cons to opening a joint bank account?
- Save together. These accounts are well suited to people who have similar spending habits. Both parties should come to an agreement regarding how and when money will be deposited and withdrawn and to ensure that both share the same goals.
- Less fees. People with joint bank accounts don't have as many fees as they would if they had two individual accounts.
- Full transparency. Since both of your names are on the account, you both have access to the other person's money and can see what the other is spending and where.
- Easier to pay and schedule bills. With all the money in one place, it makes it a lot easier for couples to manage their personal finances, pay rent and other bills.
- Complete access to both parties money. If you opt for a joint bank account where either account holder can sign, either party can make purchases without the others consent.
- Division of funds in case of separation. Either of the account holders can clear out the account, regardless of who made the deposits. Yes, you can take the other person to court to recover your share of the money, but it's a long and arduous process that offers you no guarantees.
- Complete transparency. This is a double-edged sword; while there is complete transparency you may lose some of your financial privacy.
Joint bank accounts can also lead to trouble...what can go wrong?
If you prefer your independence, value financial privacy and like managing your own money, then a joint account isn't the best idea.
It's critical that partners and couples are completely open regarding their spending habits. If one person is committed to saving, and the other can't keep their spending under control, this can quickly lead to issues. Furthermore, some couples are hesitant to open a joint bank account because things can get complicated if they separate - it is important to agree on a strategy for this prior to opening a joint account.
You need to be careful if someone is trying to push you into opening a joint bank account. Someone who might have money problems could see you as the answer to their prayers. Things you could hear include: "don't you trust me?", "it means you don't love me" or "what do you think I'm going to do? Run off with your money?" These are all a form of emotional blackmail, and there could be a reason they are so eager to share finances.
The other person's financial status should be clear prior to opening an account together - you don't want to take on someone else's debt. This is especially true about joint bank accounts that offer credit. Your partner could rack up a huge amount of debt they can't pay back and then you both are stuck with a poor credit history. Furthermore, you are just as responsible in the eyes of the law for paying back the loan as is the person who actually spent the money.Back to top
Do you pool your expenses together?
- Do you both use the same budget and consider your costs as shared expenses rather than individual expenses? If all you have is shared expenses, then it is logical to have a joint bank account.
- Do you both spend money the same way?
- Are both financially responsible or not? Is one of you going to scrimp and save while the other empties the account, spending money on frivolous things so that there's no money left to cover the bills? If this is the case, you are better off either keeping things separate or opening a joint account where both of you have to sign for each transaction.
- Are you comfortable with the idea of opening a joint bank account?
- You might save a few dollars on fees, but if you aren't really all that happy about the idea, then don't do it.
- Is the trust there?
- Trusting the other person completely and believing they will be financially responsible at all times, even if things get tough, is essential. If the trust isn't there, you are better off keeping things separate.
- Are the lines of communication open?
- Do you both find it easy to talk about money issues? If there are communication problems regarding money and you feel you need to hold back on expressing your opinion, then you are better off avoiding a joint account.
- Are our financial goals the same?
- You need to confirm that you're both working toward the same financial goals, including short term goals such as an overseas trip together and long term goals like buying a house. If you're not on the same page, a joint account will be less likely to work.
- What is the goal of opening a joint bank account?
- Figure out exactly why you should open an account and see if there is a better way of achieving said objective. If you want to save money on fees, for example, consider whether the few dollars are really worth the worry. You could simply shop around to find an account with lower fees instead of opening a joint account.
Decided to open a joint account? Here are some tips for couples.
Communication is key
If you've decided to go ahead and open a joint bank account with your partner, make sure you talk about the important issues in advance. For example:
- Will either partner have an allowance to spend on whatever they want?
- How much does each party have to put towards the bills, and who will make sure these are paid?
- Are there financial issues that need to be dealt with prior to opening a joint account?
- What to do about financial obligations from the past, like child support, loans or other touchy issues?
- If one party earns a higher salary, will they be allowed to spend more?
Then, you will have to decide which accounts will be set up as joint accounts and which will remain separate. For example, some couples choose to pool their savings in a joint account while their everyday accounts remain separate. Other couples opt to separate ownership of property, such as their homes, especially when said property was purchased before the relationship began.
Work out a budget
To make life easier, put together a monthly budget. Write down all your expenditure for a week, which will allow you to see where the money is going and if there are areas you can cut back on to save some money. Then, decide on a budget. Don't be too strict and make sure to give yourselves some 'play' money. Also, make sure you check in regularly to make sure you're on track with your budget, and address anything that needs changing / isn't working.
Maintain steady savings
No matter how hard we strive to avoid problems, it's best that you make a plan for emergencies. This could be anything from unemployment or illness to an accident or your car needing major work. It's essential to have some money set aside specifically for such emergencies. A personal overdraft could be useful in such situations as well as ensuring you have quite a bit of free credit balance on your credit cards. Of course, don't forget about insurance either. Ideally, though, you should set aside some cash in a separate bank account as well.
Remember your financial goals
By establishing your financial goals and things you want to achieve together you will find it a lot easier to save when you are both working towards the same objective.
For some couples, a joint bank account is a great option. If you decide to go with a joint bank account, you will both have to go to the bank and open the account. Note that certain banks will let you open the account online, which will make life a lot easier in terms of schedules.
Real questions from users
Is it possible to get additional debit cards?
Some banks will allow you to give out additional credit cards tied to your main credit card account. While not strictly a joint account, it still gives another person power over your money. So, to make sure things go smoothly:
- Never give out cards to people you don't know or trust;
- Don't give out cards if you aren't able to manage your own credit card properly;
- Keep in mind that in most cases you are the only one responsible for the loan. No matter who spends the money, you will still be the one who has to pay it back, so think twice before giving out cards attached to your credit card account.
If you aren't too certain about opening a joint bank account and giving your partner full access to your money, an alternative that would still offer you the convenience you are looking for is to open a joint bank account that you use to pay bills while still keeping your money in separate accounts. Just have a talk with your significant other in terms of what bills the account will be used to pay and how much each person will contribute to said bills.
How much should we deposit?
To decide how much will be deposited in the account, you can work out a fair percentage you can both put in the account every week, fortnight or month, depending on how you get paid. This percentage should generally be calculated in terms of how much each party makes as well as what the budget is and what each party's expenses are. However, talking is the best way to come up with a way to make sure both sides are happy so that you can avoid problems, including resentment building up and cheques being bounced.
Joint bank accounts can be a good idea but only if you and your partner are on the same page regarding how you spend your money and what your financial goals are. If you are simply opening the account for the sake of convenience, remember that there are plenty of other options that can provide the same level of convenience without the risk. However, if the trust is there, a joint bank account can definitely make life much easier, especially when you are working together to achieve certain financial goals.
Have you considered joint life insurance cover?
If your considering taking out a joint bank account, it could also be worth considering a joint life insurance policy to make sure your spouse or partner is protected. Joint-cover is designed for couples or business partners with similar life insurance cover requirements. As there is only one policy in place for two people, the sum-insured will be paid on a "first death" basis, after the payment is made the contract will end.
Joint life insurance policies generally offer premium discounts of between 5-10%.