Valentine’s Day 2024 - the pros and cons of joint bank accounts for couples
Getting a joint bank account is a big step for any couple - but is it necessarily the right thing to do?
Joint bank accounts are a common financial arrangement among couples who live together, and they come with both advantages and potential pitfalls. According to data compiled by Legal and General, two in three cohabitating couples have a joint bank and nearly half said they felt "less stressed" after deciding to share finances.
However, as money is the number one cause of conflicts in relationships - according to research from Royal London - it's really important you research before diving in. Here we take a look at how joint bank accounts work, the implications of having one and whether it is right for you, your partner and your finances.
What is a joint bank account?
A joint bank account is simply a type of account that two people can control so both are responsible for it. Like a normal account, with join accounts you can set direct debits and standing orders, use the overdraft, have wages paid in, and withdraw cash and make payments on a debit card. With your joint account, each of you will have a debit card linked to it and you can also have your own bank account alongside it.
Pros of joint bank accounts
One major pro of a joint account is that couples can share their money more easily, and it is a simpler way to manage day-to-day living costs. Particularly, this helps shared money responsibilities including rent, bills or mortgage payments. Another major pro highlighted by USwitch is that all your finances are transparent so you both know how the account is doing and what has been spent and where. If you need to cut back on spending or want to save for a holiday, for example, you can easily see areas of spending that could be trimmed.
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If you have a joint account, you get double the Financial Services Compensation Scheme (FSCS) protection. Under the rules, the solo bank account has protection up to £85,000. However, with a joint account, your money is protected up to £170,000. If you decide on a package joint bank account, then you both will be able to access the benefits - like cashback or travel insurance - but you will only need to pay one fee. Alongside this, joint savings accounts can offer higher interest rates than sole accounts according to MoneySuperMarket - so you could make more out of your joint savings pots.
Finally, if your partner dies, you will have immediate access to their money if you have a joint bank account. If you have separate accounts - even if you are married - this will not be the case and can often make things complicated. The surviving partner will continue to have full control of the account and can have the money moved to them under the "rule of survivorship".
Cons of joint bank accounts
As with everything there are cons as well as pros to joint bank accounts. Firstly with transparency, it is harder to keep financial secrets from your partner, so if you want to pay for a special birthday treat or anniversary gift it will be a challenge to hide it with a joint account.
However, this also can be the case with debts - so you will need to be completely open about your finances to your partner if you want to open a joint account. Concerning this, your credit history and score will also be linked to other account holders and could be negatively affected if your partner has debt. Alongside this, you’ll be jointly responsible for arranged overdraft debt even if you didn’t spend it - so keep this in mind if one of you is bad with money.
Another thing to be aware of is, that if one person takes money out of the joint bank account, it can be hard to get it back. So you will need to trust the other account holder with the account before opening one together - although some joint bank accounts require both people to sign to access the funds.
Finally, if things go wrong and you end up splitting up, you’ll normally both need to give permission for the bank to close the account. This can be awkward if you didn’t end on amicable terms. You also won’t be able to close an account until any overdraft has been paid off.
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