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Guide to joint accounts

A joint account is a type of current account that allows two or more people to manage their money together. Both account holders can deposit money in the account, withdraw cash, pay bills, use the debit card, write cheques, and so on.

Couple who have a joint account

Joint accounts can be a convenient banking method for couples, and other people that have shared expenses, such as housemates. However, there are some risks involved that people should consider before opening a joint account.

This guide will provide more information about joint accounts, how to open one, what the rules are, and what to do if there is a disagreement between the two parties.

Who can open a joint account?

Anyone can open a joint account, not just couples. While it is popular with people that are married, in civil partnerships, or cohabiting, joint accounts can also be opened by flatmates, friends, and family members. However, it is not recommended that people managing money on behalf of someone else, such as an elderly relative, open a joint account. There is no limit to the number of account holders there can be on a joint account.

How to open an account

Opening a joint account is very similar to opening a standard bank account, but each account holder will need to provide their details on the application form, proof of identity and proof of address. Recently though many UK banks have changed their processes to enable applicants to start applying for a joint account online.

Before submitting the application, all parties should be aware of who can withdraw money without permission, as some accounts will have a main account holder and secondary account holders.

Other factors, such as how debts, disagreements, and breakups will be handled, should also be discussed before the account is opened. All parties will have to sign a mandate when they open the account. This is a legal agreement that determines who has what responsibility regarding the account, and could be important in the event of a disagreement.

Benefits of joint accounts

A joint account can be a very useful financial tool as it is a more straightforward way for managing shared money and expenses. For example, couples or people that live together may choose to open a joint account to pay the household bills. Each party might have their own personal bank account, but pay their share of the bills into the joint account, and then pay them from there.

Another reason could be that there is a main breadwinner in the household, and rather than giving their partner money each month, might just give them access to their funds in a joint account.

Joint account ownership considerations?

While a joint account has some benefits, it can have serious financial implications, so it is important that all factors are considered beforehand.

If one party has a good or excellent credit score, while the other has a poor credit history, it’s not advised to open a joint account. Once a financial link is created between two people, they are ‘co-scored’, meaning that the low score could negatively impact on the other person’s ability to get credit.

As both parties are liable for the account, if one person withdraws all the money, there isn’t much the other person can do about it, as it doesn’t matter who deposited the cash in the first place.

However, if the account becomes overdrawn, each party is responsible for the entire amount owed. If one person disappears after running up debt, the other person is liable for paying the entire amount as they are "jointly and severally liable" (which means individually) for the whole debt.

What happens to joint account disagreements?

The first thing that account holders should do if there is a problem is cancel the mandate, as this will freeze the account. Once everyone is in agreement about the money or the debt, the bank will unlock it. If the parties can’t agree, the matter will be taken to court, where they will look at the relationship between the account holders and the law that applies depending where they live.

For example, for married couples or civil partners in England & Wales, the money is split equally. While in Scotland, it goes to the person that paid it in.

Getting the best joint account

Just as with current accounts, consumers should compare what is available on the market before opening an account. It’s important to consider the features that are on offer, any fees that may be charged, interest rates for both credit balances and overdrafts, whether the bank offers online banking, and branch locations.

The internet has made it much easier for people to compare the best joint accounts and other financial products, as online comparison sites display all information relevant to selection in one place.