Joint bank accounts are a popular type of account to have and it is easy to see why. People often need to pool their money together and this is not a type of account that is exclusively for couples (although these accounts work very well for this). A joint account can be held by those that live together in order to easily pay shared expenses, but they can be used by anyone that has shared payments.
Risks
A joint account is a smart way for two or more people to share money and manage various expenses, but it is important that you are careful when it comes to opening a joint account. Having a joint account comes with its risks as there will be more than one person that has access to the account which can create issues particularly if there are arguments. Other issues related to this type of account are that there is no privacy for transactions and you could be liable for repaying someone else’s debt if the account is overdrawn.
Credit Rating
If you or somebody that you are going to open an account with has a bad credit rating then you may think that you will be unable to open a joint account, but this is not true. It may impact your credit rating as you will be “co-scored”, but places like Think Money offer joint accounts for all along with a range of tools that can make it easier to budget each month and control your day-to-day spending.
Opening an Account
Fortunately, opening a joint account is relatively straightforward and not too different from opening a regular account. Each account holder will need to provide detailed information and the bank will explain how the account will work in terms of who can take money out without permission from others, how overdrafts work and what happens if there is a disagreement. If things do go wrong, the best solution is to cancel the mandate – this will freeze the account until everyone agrees on how to split the money.
Joint accounts can be an excellent way to manage your money and pay expenses either as a couple, with flatmates or even as a group of friends that have shared expenses. Although an efficient way to manage money together, there are risks attached so it is important that you all agree that opening a joint account is the best idea and that you fully understand how this type of account works.