Understand the risks and benefits of a savings account that allows access for multiple people.
Joint savings accounts are common for couples who have the same goals to work for. In some instances, having more than two joint holders will make managing the account even easier.
- You want to share an account with your child or
- You want a business account where multiple employees can make deposits and withdrawals.
Before you start to consider who should have access to your savings though, make sure that you understand the risks.
How does a joint savings account work?
Joint savings accounts are typically opened by couples, business partners, or for young children. This allows both parties access to the account, and also holds both responsible except for in the case with juvenile accounts.
The need for more than two joint account holders most often arises in business situations, where partners, treasurers and other bookkeepers all need to be able to move money in and out of the account. In that case, you will either add them as signatories, or make them additional account holders.
In the case of youth accounts, it is not uncommon to find both parents listed as account holders as well as the child. This ensures that in the event that one parent is absent, the account is still accessible.
How do I compare savings accounts that allow more than two joint holders?
Giving access to your savings is not an easy decision to come by. When you are looking into accounts that allow more than two joint holders, make sure that you are checking the following closely:
- Account operating authority. For a typical savings account, there is only need for you to sign for any transaction. If you are allowing for multiple people to have access to the account, you might want to consider one where at least two signatures are required by account holders for all transactions. When opening a business savings account, some banks will require that you fill out an account operating authority form which will outline your specifications for which joint holders are allowed what type of access, and who is required to have an additional signature.
- No fees. Look to see if you are going to be charged any fees for having multiple account holders on your savings account.
- Signatories. You may want to look at the availability of signatories rather than extra account holders. This allows them to make transactions without them being an owner of the account.
What are the pros and cons to opening a joint account?
- Easier money management. By authorising a third party to make your deposits and withdrawals for a business savings account, you can save yourself the time of having to make trips to the bank on your own.
- Added security. Having a system of checks, where a signatory is required for transactions, can help to ensure that your employees are being honest with their transactions.
- In the event of emergency. With more than two joint holders, there should always be a way to access the account even if one were to become unavailable for any reason.
- Security. With others having access to your funds, you put yourself and your savings at risk for fraudulent activity.
- Management. With multiple individuals making deposits and withdrawals into your account you may find it difficult to keep track of the balance.
What are the risks?
With a savings account that allows for more than two joint holders, you need to be monitoring the activity on the account carefully. Avoid the following to ensure that your savings stays safe:
- Assigning a signatory you don’t trust. Giving signatory permission to an individual you don’t know or trust could cause you to lose all or part of your savings.
Frequently asked questions?
What would happen to the account in the event that one of the holders were to pass away?
Having a savings account with more than two joint holders will allow the other account holder to still have access to the money in the event of the death of one of the partners.
Are you able to have more than two joint holders on all bank accounts?
No, this is a special feature usually reserved for business savings accounts or juvenile accounts. With your typical savings account only one joint holder is usually allowed.
How will I assign my signatory requirements?
You will be asked to complete a form detailing your requirements for accessing the account. For example, Commbank asks that you fill out an account operating authority, where you name all signatories and their method of operation. This would include who is authorised to make transactions on their own and who needs to obtain a second signature.