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Joint Current Accounts

How does a joint bank account work?


Joint bank accounts work the same as standard accounts, the only difference is that two or more people have access to the account and can contribute to the income and outgoings. Joint accounts make it easier for you to manage finances that you share with someone else, whether it’s a partner, family member or housemate.

Joint current accounts

What are the pros and cons of joint bank accounts?

Pros

  • You can keep track of your shared bills more easily
  • You can use the account to save easily if you have money left in it after your bills are paid
  • You might be able to earn more interest on the account if you both have your salary paid into it

Cons

  • One person can empty the account
  • You’re both equally responsible if the account becomes overdrawn, even if it wasn’t your fault
  • You’re financially attached to the other account holder which could negatively impact your credit score


What are the risks of opening a joint account?

Sharing a bank account with someone else is a big commitment and there are a couple of disadvantages to joint accounts that you should be aware of if you’re considering opening one:

  • The amount that you contribute to the account will be visible to the other account holder, so they will know how much you earn if your salary is paid into the account. They also have as much right as you to spend any money that’s held in the account, even if it’s come from your earnings. 

  • If you have a joint account, you are financially binding yourself to another individual. This means that if their credit score is bad, yours might be negatively impacted as a result. If the account goes overdrawn because the other account holder has overspent, you will also be accountable for this. 


Is a joint current account right for me?

You might consider opening a joint account (or turning your existing current account into a joint current account) if you share financial commitments with someone else, such as a mortgage or household bills. But opening a joint account is a decision that should not be taken lightly because you are financially associating yourself with someone else and it could negatively impact your credit score. 

You need to consider whether you and your partner are both responsible spenders and have the same attitude towards money. There are two different ways that you could manage a joint account; you can either both have your salaries paid into the account and use it as your everyday account. Or you could set up direct debits from the joint account to cover your household bills and both transfer over enough money each month to cover the bills. 

If you want additional security on your joint account, you can see if your bank provider is able to set up a requirement on the account that means both account holders must give their approval before any payments are made from the account.


Would we both have equal rights to the joint account?

When you open a joint account, you and the other account holder will be able to decide how you manage the account. You will have to set out a ‘joint account mandate’ which outlines how much control you both have over the account, such as who can add money to the account or withdraw it. 

Normally, if you share an account with your partner and you’re married, you both have an equal right to the money in the account, regardless of how much you individually put in. For example, if you contribute £1,000 a month and your partner contributes £500 a month, you’re both entitled to the full balance, even though you paid more into the account.



How does opening a joint current account impact my credit score?

Your credit score will be impacted by the credit score of the person you hold an account with. So, if they have poor financial history and a bad credit score, you could struggle to be approved for credit in the future, even in your own name. However, if the other account holder has great credit history, that will positively impact your score and could make it easier for you to borrow money.



How do I open a joint current account?

Opening a joint account is very similar to opening a standard current account. The main difference is that you have to set out a formal agreement to state how much control each account holder has over the account, this is known as the ‘mandate’ or ‘authority’. All account holders must agree to and sign the mandate when opening an account.



What happens if my relationship with the other account holder breaks down?

If your relationship breaks down, or you no longer want to share finances with the joint account holder, you should choose how you’re going to split the balance and close the account. You will both have to agree to the closure of the account, normally in writing to the bank. Alternatively, the bank can normally change the account into a standard account and put it in one person’s name, but again, both parties would need to agree to this. 

If you hold the account with your partner and your relationship ends on bad terms, either one of you can cancel the mandate. The bank will then freeze the account so that neither of you have access to it. They will only unfreeze the account when you have come to an agreement on how to split the money. If you can’t agree, the courts will decide how it’s split for you.