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Joint accounts explained

In a nutshell, a joint account is a bank account with two account holders. Joint accounts are often used by couples to combine some or all of their finances to help manage household expenses or to save together.

What are some of the benefits of having a joint account?

A joint account is typically either an everyday transaction account (suited for managing everyday expenses) or a savings account (as the name suggests, designed with saving in mind).

Having a joint transaction account can make it easier to manage joint household expenses. Many couples decide to deposit a set amount to cover the expenses and bills such as mortgage repayments or rent, power and gas. These payments can then be set up as direct debits that are taken out from the account automatically when they’re due.

 

A joint savings account can be an ideal way to work towards a common savings goal. Ideally both account holders should agree on what they’re savings towards as well as decide upfront how much they should both contribute and under what circumstances money can be withdrawn.

Do both account holders need to give permission to take money out?

Most joint accounts allow either account holder to get money out at any time (more likely for an everyday transaction account), whereas some accounts require both account holders to approve any withdrawals.

 

As a rule of thumb, most accounts will generally allow both account holders to access the account at their discretion rather than requiring both account holders to agree. That means if you want a joint account and you want both of you to have to agree when money can be taken out, you’ll likely need to arrange to have this set up.

What about the risks?

There can be downsides to opening a joint account, particularly if either account holder can get cash out without needing the permission of the other person. That means in a worst case scenario either account holder could withdraw the entire balance of the account without the knowledge of the other person. It’s important you only open a joint account with someone you trust.

Having a conversation upfront about opening a joint account

It’s common for couples to have different attitudes to money. One might be more of a ‘spender’ while the other is a ‘saver’. It’s a good idea to have a conversation up front about under what circumstances you’ll both take money out of the account.  Things to discuss could include: 
 

  • What’s the reason for the account - to pay household bills, set up an emergency fund or save towards a goal?
  • Will you both deposit the same amount or will you each put in a different figure? Or will you both decide to have your salary paid into the one account?
  • Will you keep separate accounts still or will you just have the one joint account? If so, will you both get an allowance from the account or will you both withdraw money when either of you sees fit?
  • Will you both need to give permission to withdraw from the account or will you both have full authority to access the account when you wish?

 

There are no right or wrong answers to these questions, but what is important is that you set the ground rules upfront. An open conversation can go a long way to avoiding any confusion and disagreements later and can help make a joint account a way of managing everyday expenses as well as helping to work towards common financial goals.

 

This information does not take into account your personal circumstances and is general in nature. It is intended as an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such.