For couples taking the next step in their relationship, opening a joint bank account can seem like a natural progression.
Sharing finances can simplify everyday tasks as you build a life together.
That can range from paying bills to saving for a holiday.
However, before opening a joint account, there are several factors to consider and talk about with your partner.
This can help you to avoid some potential pitfalls if you make a big purchase, fall on hard times or break up.
Here are three key points to discuss:
1. Do you both have similar attitudes to money?
One partner may be naturally frugal, while the other is more inclined to spend.
Trust is also paramount when considering a joint account. Recent research from Indeed indicates that 18 per cent of people admit their partner is unaware of their actual earnings. Any hidden truths about your financial situation should be brought to light at this point.
The survey also revealed that 65 per cent of individuals have encountered significant income disparities with their partner. However, this isn’t inherently problematic if there’s mutual agreement on how finances will be managed within a joint account.
It’s important to remember that in general with a joint bank account, both account holders can withdraw and spend money at their own discretion, so the other account holder could potentially empty the account, or go overdrawn.
Some account providers may give the option that all holders have to sign to make a withdrawal, which could mean needing to visit a branch to take money out.
2. Are you happy for your finances to be ‘linked’?
Having a conversation with your partner about their financial history and any past credit issues could be vital.
This is because by opening a joint account, you’ll be creating a “financial association” between yourself and the other account holder.
Get a free fractional share worth up to £100.
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Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
Go to website
As this will be noted on credit reports, it could be taken into consideration when you’re making an application for credit, such as a mortgage or other loan. If your partner has a poor history, for example, lenders could view this as potentially affecting your own ability to repay debt.
3. What if you were to split up?
While it may not be romantic, it could be worth having a conversation about what would happen to money in the account if you no longer wanted to hold it jointly. This could help to avoid any differing expectations about how the cash might be split.
If things really turn sour, you may need to ask the account provider to freeze the account so that no one has access to it while the situation is sorted out.
And, in the longer term, if you no longer have any financial associations with the other person, you could ask credit checking firms to remove them from your credit report. You may be asked to provide evidence that you are no longer associated.
