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 online one account holder has to sign.
These types of accounts are generally used by family members, couples or business partners who and trust each other. This is because anyone who is nominated on the account can use the money in the account in any way they see fit. You can compare accounts that allow more than two joint account holders here.
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, like an account two people open to add money to achieve a short-term goal. If one of the account holders passes away, the remaining people named on the account will be able to access the money but will also be responsible for any debts the account may have accrued.
What are the types of joint bank accounts for couples?
Generally, you will find that 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 signatories to sign for the approval of a transaction – both parties need to agree on the transaction and sign 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 because it can make the account difficult to access. For example, if you are away and your partner needs money urgently, he or she cannot make any withdrawals or payments without your signature.
If you aren't entirely comfortable with allowing the other person full access to the money, one option could be to create a joint account where you deposit a limited amount of funds, while keeping your salary account separate and in your name only.
Either parties able to sign
When opening a joint account where either party can sign, this means that any parties named on the joint account can perform transaction on their own, without the knowledge or approval of the other person. In other words, security is at a minimum because your partner can take out money and spend it without you being an agreement or even knowing about it.
On the other hand, it is a more flexible option and can make life easier. It's all a matter of trust.Back to top
Who are joint bank accounts suitable for?
A joint bank account is a good idea for couples, where you really trust the other person. It could be your sister, brother or a partner. Opening a joint account with someone you barely know or have just met, even if it's your romantic partner, is most likely not a good idea.
Steve and Melissa 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. He is a sales rep for a large manufacturer and he has to travel the country all the time.
He has been with his partner Melissa for almost 5 years now and decide that it is time to make the decision to open a joint bank account together. The decide to open an ING DIRECT Orange Everyday Account online. Steve and Melissa both make incidental purchases, but as Steve gets access to the money 24/7 he does not mind Melissa spending as long as all the bills are paid.
If you are in a relationship where you trust your partner implicitly and you both share similar goals and habits in terms of spending and saving, then a joint bank account might be a good idea for you. This type of account could make life much easier in terms of making deposits, withdrawing cash and paying your bills.Back to top
Should I open a joint bank account with my partner?
If you are 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 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 timeframe, the other person can take care of all the financial aspects.
The key to success when it comes to joint bank accounts is trust. If you have even the smallest doubt when it comes to your partner, then don't open a joint bank account and give them full access to your money. However, if the trust is there, then a joint bank account can be very helpful. It is important that both account holders establish clear ground rules and the lines of communication are not only open but used often.
As with anything that has to do with your finances, look into any other options that might be suitable to your situation. Pose as many questions as you need to and ensure that you are happy with the arrangement before taking the final step.Back to top
How do I compare joint bank accounts?
The easiest way to find a joint bank account that will suit your needs is to use 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.
Furthermore, you don't want to waste time opening a joint bank account – most banks will allow you to open your account online, which makes it much easier in terms of coordinating schedules so that you are both present when opening the account. The majority of banks will let you enter all the information online, saving you a lot of time.Back to top
What are the pros and cons to opening a joint bank account?
As with any financial product, there are advantages and disadvantages to joint bank accounts. Being aware of the pros and cons when it comes to joint bank accounts is essential to ensuring you make a fully informed decision regarding whether or not this type of account is a good option for your situation.
- Save together. These types of accounts are usually best suited to people who have similar spending habits. For everything to proceed smoothly, it is vital for both parties to 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. Generally, people opt for a joint bank account because they don't have to pay as many fees as they would have to if they had two accounts. It can also make life easier in terms of paying bills, the mortgage or rent.
- Full transparency. A joint bank account is an account where you completely merge your money with another person's since both of your names are on the account. This means that you both have access to the other person's money.
- Easier to pay and schedule bills. This can be a great solution for couples because with all the money in one place, it makes it a lot easier to manage your personal finances.
- Complete access to both parties money. If you opt for a joint bank account where either accountholder can sign, this means that both parties have the same level of control in terms of withdrawals and deposits.
- 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 that you'll ever be able to get the money back.
- Complete transparency. This is a double-edged sword, while there is complete transparency you may lose some of your financial privacy.
To take full advantage of such an account, you both could deposit all your money, from your salary to any cash you may receive as a wedding gift, into this account. The money can then be used to cover all your expenses, from paying rent or mortgage and the utilities to going out for dinner or drinks.Back to top
Joint bank accounts have advantages but they can also lead to trouble
An increasing number of Australians are opting for joint bank accounts so that couples can manage their money together. According to Roy Morgan Research, it appears that 22% of account holders have a single bank account, which is a joint bank account, while 19% also have personal accounts along with their joint account.
There are numerous important aspects to consider before opening a joint bank account, it all depends on how people like to manage their money. If they prefer their independence and like managing their own money, then a joint account isn't the best idea.
It's also critical that partners and couples are completely open regarding their spending habits. This is because one partner may want to save for something and the other spends all the money because they can't keep their spending under control. Furthermore, some couples are hesitant to open a joint bank account because things can get complicated if they break up. In fact, things could get complicated and lead to a break up because of the joint account.Back to top
Common mistakes with joint bank accounts
It's an enormous commitment and a very important decision to make in your relationship when it comes to opening a joint bank account. Trust is extremely important and you have to have that trust in place in terms of your partner being financially responsible during the good times as well as the bad.
You really 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. Keep in mind that such pressure could involve one partner questioning the other partner in regards to their feelings for them. 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, especially if accompanied by the cold-shoulder. In such situations, you should really refrain from opening a joint bank account because things are quite likely not to be what they seem.
This is especially true when it comes to 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.
So, you really need to be careful and consider every aspect before you open up a joint bank account. Make sure you are on the same wavelength with your partner in terms of your financial goals and don't let yourself be pressured into opening a joint bank account or you could end up losing every cent you have.
If you are considering opening a joint bank account, there are certain questions you need to entertain. These are questions that will help you determine if you are doing the right thing or not.
- Do you pool your expenses together?
- In other words, do you both use the same budget and consider your costs as family expenses rather than individual expenses? If all you have joint expenses, then it is logical to have a joint bank account.
- Are you both the same in terms of how you spend money?
- This refers to whether you are both financially responsible or not. In other words, 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, then you are better off either keeping things separate or opening a joint account where both of you have to sign for each transaction. It might make things a little more difficult but it will definitely be worth it.
- 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 in terms of them acting 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?
- You need to ask yourself if you both find it easy to talk about money issues. If there are communication problems when it comes to money and if you feel you have to hold back on saying what you want or expressing your opinion, then you are better off avoiding a joint account.
- Are our financial goals the same?
- You need to know that you are both working towards achieving the same goals because otherwise you will end up with both of you trying to push the cart in opposite directions, which means you will just end up standing still. Even worse, one of you might be pushing harder and you'll end up going backwards rather than progressing.
- 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.
Tips for couples who currently hold a joint account
Consider your reasons for a joint bank account
Make sure you never open an account with someone you've just met or have some doubts about in terms of trust. Stick to opening a joint bank account with people you knew well and trust completely, such as your mother, father or spouse.
If you have a joint account that you use for savings, paying credit cards, the mortgage or other bills, make sure that you are financially safe so that you are protecting yourself as well as your family.
If the account is for everyday use, you need to ensure that both of you have the same goals in terms of savings. You also need to establish clear rules so that both parties are in full agreement regarding what the account will be used for.
Communication is key
On the other hand, 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?
- Are there financial aspects that need to be dealt with separately and who will be in charge of said affairs?
- What about financial obligations from the past, like child support, loans or other touchy issues?
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 for both of you, put together a monthly budget. The easiest way to do this is to write down all your expenditure for a week, which will allow you to see where all the money is going and if there are areas you can cut back on to save some money. Then, work out a budget. Don't be too strict and make sure to give yourselves some 'play' money, which will make it much easier to stick to your budget. Also, make sure you communicate with your partner regularly, as this will increase the chances of things succeeding.
Maintain steady savings
Since things happen in life, 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 sickness to an accident or your car needing major work. The idea is that 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
You should also make sure you and your partner are on the same page in terms of savings. Establish your goals together and you will find it a lot easier to save money when you are both working towards the same objective, like a deposit on a home, a special holiday, a car or furniture.
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 when it comes to 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%.