BasicsSavings&Banking

Joint Bank Accounts: Everything You Need To Know

The world of banking can be a maze of confusing jargon, and understanding the various types of accounts and their respective purposes, fees, and benefits can be more than a little difficult.

With hundreds of different banks in the UK, each with different bank account types, choosing the right joint bank account can prove a frustrating affair.

We’re here to help you begin to navigate this section of the financial world, and will be diving into the particulars of joint bank accounts. Continue reading to learn:

  • What joint bank accounts are
  • How they work
  • The pros and cons
  • And the answers to some of the more frequently asked questions.

By the end of the article, you should be in a great position to decide if a joint bank account is a good match for you, and how to choose which joint bank account is best for your particular goals.

What Are Joint Bank Accounts?

A joint bank account is simply a bank account where more than one person is able to access and control the account. Joint bank accounts allow spouses, couples, housemates, business partners, and others to share a bank account for the purposes of simplifying and sharing finances and expenses.

How Do Joint Bank Accounts Work?

A joint bank account works very similarly to a standard bank account as far as deposits, withdrawals, and terms.

Joint bank accounts allow more than one owner to make decisions regarding the account.

Every individual named on the account will have full access to the account, which includes making deposits, withdrawing and transferring funds, and writing cheques.

Typically, a bank will limit the number of owners of a joint bank account to two, though some institutions may permit as many as four owners on a single account.

Benefits Of Joint Bank Accounts

Joint bank accounts are a convenient way for people who share expenses like mortgage or rent payments, or other common household bills. Joint bank accounts are also a great instrument for business partners to share company expenses and have a separate account dedicated to the business and its operations.

In addition to the convenience factor, joint bank accounts offer, you can also often earn more interest in a joint bank account since it usually means you’ll be carrying a higher average daily account balance.

This may also entitle you to additional benefits that you wouldn’t necessarily receive as a sole bank account owner with a lesser sum of money in the account.

Another nice benefit of opening a joint bank account is organization and accountability.

Often times, the countless bills relating to household or business expenses can pile up and be difficult to keep track of.

With a joint bank account, however, owners can see when something has been paid, making expenses easier to keep track of, and providing the accountability needed to maintain proper organization and avoid missed payments, confusion, or the commingling of joint purchases with independent spending.

Joint bank accounts also offer the benefits that accompany other bank account types.

Joint bank accounts are one of the safest and most effective ways to keep your money and manage shared expenses. Joint bank accounts can also help to avoid disagreements or disputes by allowing everyone to see account activity and make decisions pertaining to the account.

One final benefit of a joint bank account is the financial protection provided by the UK’s Financial Services Compensation Scheme (FSCS).

In the event of a bank’s insolvency, joint bank accounts are insured under the FSCS, which covers up to £170,000 per couple per participating bank or building society.

Downsides to Joint Bank Accounts

Of course, joint bank accounts are not the perfect product, and it’s important to acknowledge that there are a couple of risks and downsides to opening a joint bank account.

When it comes to opening joint bank accounts, you should always be confident in, and fully trust the other owner or owners.

Since your financial records will be inextricably tied through the joint account, it is absolutely imperative that you have the full faith and confidence in the ability of every account owner to exercise and demonstrate financial responsibility.

Keep in mind that when opening a joint bank account, your credit and the credit of the other members will be linked, so make sure your co-owners have a good credit score.

Joint bank accounts unite the finances of two or more people, and though everyone can deposit money, they can also withdraw funds. Joint bank accounts risk exposure of your money to the other owners of the account, and since funds are not separated, other joint owners can spend money that you have deposited.

Equal access by all owners can lead to other, more severe downsides and complications.

If another owner attempts to draw funds from the account that are not available, overdraft fees are almost certain to be incurred.

If one of the account owners isn’t diligent and responsible, a simple oversight of an account balance can result in unnecessary fees.

Finally, we come to the most severe downside of joint bank accounts—debt.

If an owner of the account decides to be irresponsible and spend more money than is in the account, fees are going to be the least of your problems.

When a single member of the account goes into debt, the other members are on the hook for the balance of that debt.

So, if everyone on the account previously had good credit scores, those numbers will plummet and everyone’s credit scores will suffer dearly.

Opening Joint Bank Accounts: How To Find The Best Joint Account Plan

There are hundreds of banks in the UK, each with its own pros and cons, strengths and weaknesses. Let’s have a look at some of the best joint bank account plans, and what details to keep an eye out for when choosing where to open your joint bank account.

Assess The Benefits Of Each

Just about every bank offers certain benefits, often in the form of waiving interest charges for a specified period of time or offering a sign-on bonus. Check online or ask at a local branch about sign-up bonuses and welcome offers before opening your joint account.

One of the most common add-on bonuses banks like to offer to clients opening new accounts is a simple monetary incentive.

Many banks will also have rewards in the form of cashback, so you’ll get a percentage of the money you spend in certain categories back.

Most banks have limitations on benefits, so be sure you read and understand what restrictions or rules apply.

It’s also possible that your bank may offer additional benefits in exchange for a monthly fee, like Barclays’ Blue Rewards program, which provides its members with cash rewards for direct debits and select purchases and cashback from retail partners for a £3 per month charge.

Another benefit of joint bank accounts that is often overlooked is insurances.

Most people don’t realize that there are plenty of joint bank accounts that offer packages such as travel insurance, mobile phone insurance, and car breakdown coverage. Generally, these services cost a fee but often represent an opportunity to get the assurance you need at a great value.

Fees & Charges

Every bank will have some sort of charges or fees to consider.

Some of the most common things to look out for here are monthly account fees, overdraft fees, and the bank’s interest rate.

Some accounts may also have a fee that is waived as long as a minimum amount is maintained, or you deposit more than a certain amount every month.

Other fees to keep an eye out for include ATM charges and wire transfer fees.

Bank & ATM Locations

While most banking can be done online nowadays, it’s always a good idea to check and make sure your bank has some local branches, in the event you need to speak to someone.

Depending on your specific needs, you may also want to check local ATMs to make sure you have access to your money during non-banking hours, if need be.

Other Information to Keep in Mind

Don’t forget to ask about different account types. While you may be presented with one option by a certain bank, most banks will have several different joint bank account types for you to choose from, each with its own terms, benefits, and fee structure. For example, the Royal Bank of Scotland, for instance, has several different joint bank account types from the no-fee Royal Bank Select to the Reward account and Royal Bank Premier. Each of these account types can vary in terms of its monthly fees and overdraft charges, interest rates, cash back, insurance cover options, and more.

Our best advice to you is to ask to see every joint bank account option, or to go online with all the account owners and weigh the different options. Explore joint bank account offers from a few of our favourites, including Nationwide, NatWest, Barclays, TSB, and the Royal Bank of Scotland.

Common Questions About Joint Bank Accounts

Now that you’re familiar with how to open a joint bank account, as well as the pros and cons of this account type, let’s go into some more detail about these sorts of accounts and the frequently asked questions that come up when talking about joint bank accounts.

What Do I Need to Open a Joint Bank Account?

Opening a joint bank account shouldn’t be a complicated or frustrating process, and is something that can easily be done in a couple of hours or less. In fact, many banks even allow you to open accounts completely online, though it is certainly a service that every bank should provide at any one of its brick and mortar locations.

Once you’ve chosen a bank you’d like to do business with, you can choose to visit a location in person and speak to a banking professional. Additionally, check to see if they offer new account servicing online.

Proof Of ID

Like any other account, opening a joint bank account does require some paperwork. In order to open a joint account, you have to provide proof of identification, usually in the form of a driver’s license or passport. In addition, banks also ask for a billing statement that includes your name and residential address. Commonly accepted documents typically include utility bills, a bank statement from a different account that you own, or a credit card statement.

Minimum Contribution For A Joint Bank Account

Similar to an ordinary bank account, joint bank accounts vary in terms of a required minimum opening deposit or minimum daily balance, if applicable. In order to open any bank account, joint bank accounts being no exception, there is an application process that everyone being named on the account will have to complete.

Proof Of Address

You, and anyone else who is going to be an owner of the account must complete an application that asks some simple questions and includes your personal information and details.

Additionally, banks require verification of an address, which can be achieved with a council tax bill, a bill from a utility company, or a statement from another financial institution where you are an account holder.

What Happens When I Close A Joint Bank Account?

Closing a joint bank account is something that nearly everyone who opens one considers at one point or another, and the process can transpire in a few different ways. One of the most common reasons for people needing to close a joint bank account is due to some sort of separation. Whether it’s an informal break-up, a formal divorce, or an amicable parting of ways, the bank account needs to be closed and the funds need to be disbursed accordingly.

The simplest way to close a joint bank account is for all owners of the account to agree to cancel the account. Once this is decided, all the owners will typically be required to notify the bank in writing of their unanimous decision to close the account. Once the account is closed, the owners are free to divide the money between themselves.

Another option for closing a joint bank account is to remove an owner, leaving the remaining owner in control of the account. This method of closing a joint account would result in a transition from a joint account to an ordinary bank account with a single owner. Like closing the account altogether, moving the account into the name of a single owner will require the written agreement of all owners on the account.

In the messiest cases of joint bank account closure, the owners do not necessarily agree on things, and perhaps one of the owners refuses to agree to close the account. In this situation, any one of the owners is able to cancel the account’s mandate, a temporary fix that puts a freeze on the account in question. As soon as the freeze is requested, none of the account owners will have access to its funds, including the account holder that initiated the freeze.

What Happens When A Joint Bank Account Is Frozen?

When an account is frozen, there are generally two ways to resolve the freeze and access the money.

The easiest way to access and divide the funds is to have all parties involved come to an independent agreement on how to split up and distribute the money.

If such an agreement is reached, the bank will release the funds and close the account.

If an agreement is not reached, however, and the account owners continue to dispute their claim to the account’s funds, the courts will intervene and make a decision on how to disburse the money in the account.

In cases when the court has to intervene, there are usually two different methods the court uses to divide the funds in the account.

For example, in England or Wales, when the joint bank account owners are spouses or civil partners, the money in the account is split equally, regardless of how much money each member has deposited into the account.

When the account owners in question are friends, siblings, business partners, or a non-civil or unmarried couple, the court will divide the funds in the account examining how much each member put into the account and distributing accordingly.

Do Joint Bank Accounts Affect Your Credit Record?

Yes, a joint bank account can absolutely affect your credit record, which can both hurt your credit or improve your credit an make it easier to get a loan.

Despite the fact that you and the co-owners may only share one account, your personal credit and financial standing can be affected by the credit of the other owner or owners.

So, while most people are rightfully concerned with the prospect that a co-owner’s debt or poor financial decisions may negatively impact the credit of the other owner or owners, there is also some upside to the fact that all owners of a joint bank account share a stake in one another’s credit.

If your credit record is strong but you’ve had trouble getting a more sizeable loan for whatever reason, it’s possible that your co-owners’ credit history could give you a bump and help you qualify for a higher dollar amount or get a loan you might not have otherwise qualified for.

Can We Get A Joint Bank Account If We Are Not Married?

Virtually any two people who meet ordinary requirements for opening a bank account of any type can decide to open a joint bank account. In fact, there is no law or rule of any kind stating that there has to be any kind of formal relationship between joint bank account holders.

Many people associate joint bank accounts with married couples, and there are plenty of people who agree that married couples should have joint bank accounts.

Nevertheless, joint bank accounts can also be a great financial instrument for people who are not married, though most people would answer in the affirmative when asked should married couples have joint bank accounts.

There are several situations where two (or more) people might want to open a joint bank account and enjoy its benefits.

Take two friends living together, for example.

Instead of having one person pay the utility bill and having the other reimburse 50% of the amount while the other flatmate writes the cheque for the rent and waits for his friend to pay him back the money owed for his half of the rent.

The list goes on and on with expenses and bills crossing forming a complicated and confusing mess of numbers and balances owed.

Instead of having to deal with seven or eight (or more) expenses and worrying about who is paying what when and how the other person is going to reimburse to ensure that everyone pays his or her equal share of the bill, a joint bank account allows for simple accounting, financial management, and bill payment.

In addition to anyone living together, a joint bank account is practically a must for any two or more people in business together.

Businesses have expenses and often need things on short notice.

With a joint account, business partners can both fund the account and spend its balance, making it far more simple to cover the necessary expenses and purchases of the business without having to worry about over-complicating invoices.

While the benefits of joint bank accounts are evident for a variety of different people in different situations and extend beyond application to just married couples, caution should always be exercised when making the decision to open a joint bank account. Though you may be close friends with someone, dating a person, or in business together, it’s important to bear in mind the implications of tying your financial fate to theirs.

Always make sure you fully trust the person or people you’re opening the account with, regardless of your relationship, and remember that once you open a joint bank account together, anything any one of the owners does financially can affect not only his or her own credit record, but the credit record of the other owner or owners, too.

Are Joint Bank Accounts Frozen When Someone Dies?

No, generally not, since most joint bank accounts with right of survivorship claims will keep the account active for the surviving owner. After an owner in a joint bank account dies, the deceased owner’s stake in the bank account will typically be subject to the rule of survivorship, passing ownership to the surviving member outside the will of the deceased.

This process tends to be a relatively easy one, and can usually be accomplished by the surviving member presenting a death certificate to the bank.

Of course, this only applies when there is right of survivorship, and in some cases the owners may have agreed upon different terms in writing when opening the account.

When an owner of a joint bank account dies, it is possible that someone can file a dispute and involve the courts if the deceased owner was the one who paid most or all of the money into the account.

If the courts are faced with this situation, there is the possibility that the money can fall under the deceased individual’s estate.

In order to prevent this, the surviving account owner will usually have to prove to the court that the deceased intended for the money to remain with the surviving co-owner.

Are Joint Bank Accounts Subject to Probate in The UK?

An ordinary bank account in the UK will more often than not be frozen and have to go through the probate process before its funds are released from the accounts of the deceased.

However, there are certain cases where bank accounts are exempt from probate, and joint bank accounts are one of the exceptions.

Most joint bank accounts will transfer assets over to the surviving account holder after he or she provides the bank with a death certificate and completes some paperwork. The probate process is not required prior to the transfer.

Final Thoughts

Opening a joint bank account can be beneficial for many different pairs or groups of people, but always think carefully about the implications of tying your financial record to someone else’s.

Take your time in choosing which bank to do business with when opening your joint account, and don’t be afraid to ask questions and share any concerns you might be having.

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