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Joint bank accounts

What are joint bank accounts?

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Joint accounts are a flexible way to manage shared household expenses such as utility bills and mortgage payments

By Esther Shaw

Published: 09 March 2020

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A joint bank account is an account that you can share with your partner, housemates, or family. With a joint account, all account holders are entitled to make and view transactions, hold a bank card, and pay money in.

Joint bank accounts are often used as an easy and transparent way to manage shared finances. For example, a couple living together may open a joint account so they can pay in money that will then be used to cover the cost of their rent or mortgage, and other bills. Some people who live in shared housing also open joint accounts for the same thing, sharing the bill-paying responsibility among all tenants.

What are the risks of a joint account?

Joint bank accounts are a big commitment and there are a few potential risks that you need to be wary of when considering them.

  • Whomever you open a joint account with will have as much right to the money in the account as you do, and you’re unlikely to be able to control or restrict this
  • Opening a joint bank account creates an association with the other account holder(s) in your credit report – and this means that if they have a poor credit rating, yours may suffer as a result. If the account were to go overdrawn because another account holder has mismanaged the account, all account holders are liable for this

Opening a bank account as a couple: If you’re thinking about whether opening a joint account as a couple is the right move, it’s wise to consider your spending styles: are you financially in-sync? If you have the same attitude to money and spending then this could be a smooth arrangement, but if don’t then you may want to think about using a joint account to manage bills alone, rather than combining your finances entirely.

It’s also important to understand that if the relationship were to break down, a joint account is vulnerable to one person withdrawing the balance and leaving the other person high and dry. This can be mitigated if you suspect trouble is coming down the line: you can ask the bank to freeze the account while you agree what to do with the balance.

Opening a bank account with housemates or flatmates: If you’re thinking about opening an account with the people you live with, it’s important to consider how financially savvy they are. As well as the risk of being associated with someone who has a much lower credit score than you, having a joint bank account means you’re equally liable for someone else’s mismanagement of the account.

However, it may be possible to set up a requirement on the account that means everyone needs to give their permission for expenditure outside the normal run of standing orders and direct debits. You should discuss this with your prospective bank to see if it’s possible. 

Will opening a joint account affect your credit score?

Bear in mind that the credit record of the other account holder will have an impact on your own score if you have held a joint bank account together.

So, if they have a bad credit history or run into financial problems, it could affect your ability down the line to get credit, even in your own name. But on the other hand, if they have a spotless credit record, it could make it easier for you to borrow money.

There are some simple steps you can take to improve your credit score, such as building your credit history and getting on the electoral role. Find out more on how to improve your credit score here. You can also check your credit score for free with MoneySuperMarket’s Credit Monitor.

What about overdrafts?

Your joint account may come with an overdraft facility, but overdrafts can cause disagreements between joint account holders, which can lead to a lot of financial trouble.

The most important thing to remember is that any account holder may be able to run up an overdraft on a joint account without your permission.

And if the account goes overdrawn, each joint bank account holder is responsible for the whole of the debt. In other words, you could end up footing an unfair bill.

If you already have an overdraft on your current account, you may still be able to open a joint account with the same provider. But note that funds from your sole account could be used to cover debts in the joint account, so you may want to pay off your overdraft first.

Can you have a sole and joint account with one bank?

Yes, but be aware that if you have a joint account and a sole personal account with the same bank or building society, the bank can legally transfer money from your personal account to cover a debt on your joint account.

However, this is not common and is only likely to occur where a customer owes money and has not responded to contact from the provider over a period of time.

Under FCA rules, 14 days’ notice must be given and the individual cannot be left in hardship due to the transfer of funds.

The bank can’t transfer money out of your joint account to cover a debt on your sole account, unless all the joint account holders agree.

How do you open a joint account?

It’s easy to open a joint account. You can apply online or in branch, and each account holder will need to:

  • Complete an application form with their personal details
  • Provide proof of address, such as a utility bill or other bank statement
  • Provide proof of identity, such as a passport or driver’s licence

Most current accounts will allow additional account holders to be added during the application journey.

When opening a joint account, the bank or building society should explain about the extra rights and responsibilities involved before you open the account.

They should tell you the following:

  • Whether one individual can take out all of the money without the others knowing or giving their permission
  • If each person is individually responsible for paying back the whole amount of any overdraft on the account
  • What to do if your relationship with a joint account holder ends

When you open a joint bank account, the bank or building society will ask you to sign a mandate. The mandate is important because it sets out how the account is run and outlines your responsibility over the account.

What happens if you need to close the joint account?

If the relationship breaks down, or your housemates decide to go their own ways, the best option is probably to close the joint account. You can then divide the money between you, but the bank will need all account holders to agree – usually in writing.

You could also change the account into one name only. Again, the bank would usually need the written permission of all parties.

If it’s a joint account with a partner, and the split is acrimonious, either one of you can cancel the mandate. The account is then frozen so no one can use it, including you. The bank will only thaw the account when everyone agrees how to split the money. If you can’t reach an agreement, the courts will decide for you.

What are the legal rules on dividing joint bank accounts?

If there is a dispute over dividing the funds in a joint bank account, it may be decided by the courts.

The courts look at joint bank accounts differently depending on your relationship with the other account holders and where you live.

For example, if you live in England or Wales and have a joint account with your spouse or civil partner, the money will be split equally, even if one of you never paid in a penny.

But if you share your joint account with anyone else, perhaps a sibling or a group of friends, the cash could be divided up according to the amount you contributed.

What is the financial protection for a joint account?

Joint accounts are covered by the Financial Services Compensation Scheme (FSCS), which guarantees savings up to £85,000, or £170,000 for a couple, for each authorised bank or building society.

If there are more than two names on the joint account, the financial protection may extend further, but you should check the terms and conditions with the bank or building society.

Pros and cons of having a joint account

Pros and cons of opening a joint bank account]

Compare joint accounts

The easiest way to find the best joint account for you is to use MoneySuperMarket to compare different accounts with different providers.

As joint accounts are just current accounts for more than one person, simply compare current accounts, decide which one suits you, and then apply online.

When you compare current accounts with MoneySuperMarket, you will be asked what type of account you want (for example, a high interest account) and be able to sort by best customer service, highest switch incentives, digital banking rating, overdraft level or brand.