Put simply, a joint bank account is an account that you share with your partner, housemates, or family. Accordingly, each accountholder is able to check their balance, make transactions and hold a bankcard. Here, we discuss how to set up a joint account, and what the recommended uses for one are.
Why Have a Joint Account?
Joint bank accounts are often a convenient and transparent way to manage finances, particularly when more than one person is responsible for a particular outgoing. For example, a couple who lives together may wish to open a joint account so that they can both contribute towards to cost of a mortgage payment, rent, or household bills. However, despite its usefulness, there are some risks that you should be mindful of when opening a joint bank account. Crucially, it is of the utmost importance that you trust anyone you open a joint account with; as you have no control of the transactions they decide to make. Moreover, you will also become linked to the joint accountholder in terms of credit rating. Specifically, if they have a poor credit rating, your score will likely lose points. In addition, if the joint account should become overdrawn, then both accountholders will be liable, even if it is the fault of a specific individual.
How Do Joint Accounts Work?
A joint bank account works in more or less the same way as a typical current account – but with more than one person able to withdraw and deposit money or make transactions. However, most banks will only allow two accountholders, but some can allow up to four people, such as in instances where housemates are contributing to rent payments. In such case, the accountholders can set up direct debits and standing orders to manage financial outgoings. In turn, each accountholder can set up automatic money transfers from their current account in order to add to its balance, or simply choose to have any income paid directly into the joint account.
How to Open a Joint Account
It’s very simple to open up a joint account, and prospective accountholders can apply both online or in-branch. However, each accountholder must insure that they complete the necessary application form with their individual details, provide a separate proof of address, and a separate proof of identity.
Closing a Joint Account
In the event of a spousal separation or a change of household circumstances, you may wish to close your joint current account. Typically, banks usually require one of the named accountholders to visit their local branch in person. It is not always necessary to bring along all of the accountholders, as a bank’s policy usually allows unilateral closures. However, joint accounts must have zero balance before they can be closed. Therefore, it is recommended that you divide your assets beforehand, which is of course complicated in the event of a separation. Once at the bank, an accountholder will usually only require photo ID and to complete a form before the account is formally closed.