Going Dutch: The Pros and Cons of Joint Accounts

By Rosie Earl

If you share your life with a special someone, your finances will be an integral part of each other’s lives.

But is it always the best policy to share everything when it comes to money?

When a couple takes a big step, such as getting married, the finance conversation makes an appearance. You need to make the decision how the bills will be paid, who will be in charge of the shopping and making sure that you have enough left over for take out at the end of the week. You may decide that the best way forward is to put all of the wages into one big kitty, following a ‘what’s mine is yours’ philosophy or you may decide to keep it all separate. Let’s weigh up the pros and cons of a joint account to help make the decision easier.


What is a Joint Account?

A joint bank account is a standard current account that can be in multiple names, normally couples. You can open a joint account together, or convert an existing current account to allow another party access to it. Any money in the account is the property of both parties, and they have an equal right to deposit or withdraw the funds without the permission of the other person. In the event a relationship breaks down, or you have a change of heart about the account, most joint accounts can be converted back to standard current accounts by speaking to your bank or building society.

It is worth noting that some banks apply an age restriction on joint accounts, so if you are under 21, you should check with your provider that you are eligible.

Joint Accounts: The Pros

There Are No Secrets

We know that the key to a great relationship is honesty. When you have a joint account, both parties have access to all the funds going in and coming out. You can see exactly how much each other earns, and you know, as a pair, exactly how much money is left after the bills go out. This gives you both a bit more understanding about how much everything costs and how much you are each contributing. If there’s any difficulties, debts or huge bills, you are both immediately made aware of it. This level of transparency is particularly helpful when you’re working towards a common goal, like a holiday or home improvements.

More Interest on Savings

Some savings accounts have great interest rates you can take advantage of, and the more you put in, the more your get out. If you’re a First Direct customer (existing or new) you can apply for one of their Regular Savings accounts. You must deposit between £25-£300 per month and you get a super 5% interest back on that for the first 12 months. If between you, you and your other half can get that £300 per month, you could be rewarded with an extra £144 at the end of the year. Nationwide customers can apply for the Flexclusive Regular Saver, which also carries 5% interest. You and your partner can deposit up to £500 per month, and you’re free to skip months and withdraw cash when you need it. If you hit that £500 goal each month, you could earn £240 interest over the year.

Learn or Teach a Lesson

The more financially responsible partner will be to avoid the frustration that they’re paying for all of the boring stuff, like bills, petrol and groceries, while their partner gets to spend all of their wages of fun things, like nights out and new phones. If all of the money is in the bank together, both parties are paying towards the bills, to the savings and, yes, towards the treats too.

Joint Accounts: The Cons

There are NO Secrets

I used work with a girl who was desperate to get engaged. Her birthday was coming up, and she saw her partner had withdrawn £1,000 from their joint savings account. She waited, and on her birthday she was given… a Primark handbag, a Beyonce CD and a ride in his car that had just had £1,000 worth of modifications done to it. Ouch! 

It can also be a bit unnerving to have someone scrutinising your spending. Some people, particularly when they’ve got a lot going on, or they’re feeling stressed can become irritated at the slightest things. After a  long day, you could find that some crossed words about whose turn it is to do the washing up becomes a full on row because you spent £75 on ASOS. You may feel that your money is your own, and no one should be allowed to tell you how to spend it.

Unequal Earnings

Some couples are on pretty even footing when it comes to salary, and some couples are very different. Now, this may not matter to you, the higher earning partner, but one the other hand, it might. You may think, I work really hard, I’ve earned this money, I want to do what I like with it. And as long as you’re contributing to the running of the household, why shouldn’t you have autonomy over your salary, if that’s one of your priorities. You don’t want to see your partner go short, but you want your own fiscal freedom too. The feeling of inequality could lead to resentment long term, and may even lead to the breakdown of the relationship.   

One Partner Could Harm the Other

Sometimes people go into a relationship with baggage. This could be emotional, of course, but it could also be financial. If your partner was declared bankrupt, had a CCJ against them, or has bad credit from arrears, then your credit rating could be affected too. If your partner runs up arrears on something you’ve taken out in joint names, such as a loan, your credit rating will certainly be negatively affected. This will make it more difficult for you to get credit in your own name, even if you were not responsible for making the payments.

If one partner is a spendaholic, they could also do some damage if they have unrestricted access to all the household income. If they can only spend their own wages, then they can only hurt themselves. If they can spend all their partner’s wages too, then that could plunge both into debt. If you’re concerned about your partner’s spending or debt and how this could impact you, you can talk to the Citizen’s Advice Bureau.  

Important things to remember

- Any account holder can make a withdrawal, apply for an overdraft or transfer money out of the account without the permission, so there is an element of trust and responsibility required.

- Any parties named on the account are liable to up to 100% of any debts incurred on the account, so if one partner runs off leaving a maxed-out overdraft, the remaining partner can’t get away with only paying 50% back - they will be responsible for the whole thing.

- If you are credit scored in the future, the joint account will create a financial link between you and the other account holder/s. Even if your joint account remains in credit, if they have miss a credit card payment, or worse, end up having to file for bankruptcy, your credit score could be impacted. Find out how to check your credit score here.

- Banks have different eligibility criteria for their joint accounts, so before you apply, do your research by checking online or visiting your local branch. This will save to time in the long run.

Top Takeaway

Joint accounts have some great benefits - shared responsibility, full financial transparency and better interest earning due to more deposited funds, however it can also cause difficulties if one partner is not as financially responsible. Have the conversation and decide what will be best for your relationship, joint accounts, sole accounts, or both. There’s no right or wrong, only what is best for you.

Author bio: Rosie is a massive geek who loves anything Hello Kitty or penguin related. She writes every day and wants to be Caitlin Moran when she grows up. If she was an animal, she would be a baby dragon (with a solid background in finance). The Sorting Hat would have put her in Hufflepuff, and she is cool with that.

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