What are joint current accounts?
Sharing your finances with a partner by opening up a joint current account can be convenient.
There are some drawbacks to joint current accounts which we'll go through, along with the associated advantages, so that you can be in a good position to work out whether or not one will suit you.
Who controls the money in a joint account?
Joint accounts are, fairly simply, current accounts that are shared by two or more people who can (usually) all withdraw from and deposit money into them.
They can serve a variety of purposes and while often used for married couples who share their money, many who share houses are now using them to pool money to pay bills and other group expenses.
When you set up a joint account, in order to work out who has what privileges and what level of access to the money, you'll need to sign a mandate.
When you sign the mandate you'll decide things like who can withdraw money and make payments individually, and which actions can only be done with the agreement of all of the account holders.
Often, if it's a married couple, all access will be totally equal, but sometimes, and this is more often the case for larger groups, one party will be chosen as the lead account holder.
Any kind of credit agreement, including overdrafts, can only ever be set up with the agreement of all parties.
Generally, unless you've specified otherwise, when you set up a joint account, individual statements will be issued to each account holder.
As a group sharing a house, having a joint account set up in order to pay bills and any other expenses that you all pay for can be convenient and helpful. It helps avoid disputes over who pays what and, as long as you all pay enough in regularly, you can be certain that the money you need is there when you need it.
As a married couple sharing finances equally, having a joint account can again make things more convenient and help to avoid disputes.
There is an added benefit when it comes to credit ratings – if yours isn't great but your partners is, then you could find that by getting any credit through a joint account, you could find yourself getting much better deals when it comes to things like interest rates.
This however does go both ways – if you're the party with the better credit rating, then you'll find that you may get worse deals if you apply for credit through your joint account.
The biggest thing to remember when it comes to joint accounts is that a high level of trust among all parties is required for them to run smoothly.
You are essentially sharing not only your money, but also your personal information and spending habits (if the account is used for general spending) with another. If you aren't comfortable with this then you shouldn't be using a joint account.
You should also note that if you have a personal account with the same bank, then funds could be taken from it to pay off any debts from your joint account.
If you do come to any disagreements regarding the running of your joint account, then you can freeze the account at any point by cancelling the mandate.
Once you do this, the money (or debt) will be divided among the account holders in some way that must be agreed upon. If no agreement can be reached among the account holders regarding how to do so, the responsibility will be handed to the courts.
How the courts decide to divide up what's in the account will vary.