A joint bank account can come in handy when you are planning to share expenses with someone. For instance, you can open this account if you are living with your partner or saving for a holiday with a friend. However, the account can also be risky if the relationship with your partner goes sour. In this guide, we will explain everything that you need to know about joint bank accounts and when they are a good or bad idea.
A joint bank account is an account that is shared between one or more people. Those sharing the account do not necessarily have to be a couple. However, around 65% of those who share joint accounts are spouses. Housemates, business partners, or friends can open the joint account. Having a joint account makes it easier for those involved to pay their household bills easily. As well as managing their shared incomes more easily. Nonetheless, the account creates a financial link between the partners which may be a good or bad thing.
To evaluate if combining the finances is ideal for you, you should consider the following:
The only difficult thing about opening a shared account is deciding if it is the right decision. As well as finding the right person to share the account with. The rest of the process is easy. Most financial institutions allow their clients to open the account online. Therefore, you will only be required to choose the account that best suits your needs based on what the organisation is offering.
When applying, you can decide to create a joint account or choose to add a co-applicant(s) who will become co-owner(s) after the application is approved. The requirements needed for the application may vary among financial institutions, but the application will require the option to create a shared account.
Nonetheless, co-owners of a joint account will be required to provide their personal information.
You should also note that conflicts can arise because the members sharing the account will have equal rights; therefore, anyone can change details, withdraw, deposit, or transfer money in the account without your consent. Some of the conflicts that can arise are:
The process of opening a joint savings account is similar to that of applying for a solo savings account. The first thing you should do is find a savings account with flexible conditions, high-interest rates, and low fees. Then make sure that the person you are opening the account with is of legal age. You then have to apply for the account and verify your identities and provide your personal details. You then have to select the number of accounts and debit cards that you both need. The last step is to confirm the application, then both of you can begin saving.
Different joint bank accounts have different characteristics, just like other normal accounts; you just have to find what suits your needs best. For instance, you could want to get an account that offers an overdraft so that you could have enough finances when a direct debit is due. You could also want one which offers high-interest rates. The key is to compare features offered by a joint bank account and find one that suits you best. Some of the features you would want to consider are, accounts for bad credit, accounts with benefits, accounts that reward spending and those with zero monthly fees.
Various lenders provide different types of accounts that have varying rewards, overdraft facilities, fees, and interest rates. Compare different accounts to find the one that suits you and your co-owner the most.