One of the biggest commitments you’ll make is to open a joint account with your partner. It’s a huge decision in your relationship, so only do it if you completely trust them — in accessing the money, in good and bad times.
There are 2 types of joint accounts:
- Both to sign — This allows transactions to be made when both parties sign. If one doesn’t sign, the other wouldn’t be able to access the fund.
- Either to sign — This allows both parties to transact independently of each other.
Benefits of a joint account
Usually, people open a joint account to pay lesser fees with just one account, instead of two. It’s also for easier management of joint payments such as rent, mortgage, and other bills.
If you and your partner spend money in a similar way, a joint account is for you. There should be an agreement on how and when to deposit and withdraw money — to meet the same goals.
Consider the following if you’re planning to open a joint account:
- What’s the objective in opening a joint account? Is there another way to achieve this objective?
- Do I completely trust the other person, even during tough times?
- Do we communicate well about money?
- Do we have the same financial goals and spending habits?
Another convenient way for you and your partner would be to open one shared account for your shared bills but keep your other money in separate accounts.
Discuss with you two what bills you will pay and how much you each will contribute with your shared account.
Risks of a joint account
Opening a joint account with someone you’ve just met is never a good idea. Remember, you’re giving them access to your money.
A family member or your long-time partner, people who you trust, are the ones suitable to have joint accounts with.
Case study:
A man is constantly away, working interstate. He opens a joint account with his new girlfriend — so he wouldn’t have to worry about paying his bills while away, as she would arrange it for him.
He checks his account weeks later to make sure his salary came in. He finds out there’s no money in the account. He tries to contact his new girlfriend, but she won’t return his calls.
He rings the bank and learns she had withdrawn everything from the account. It’s allowed as it’s a joint account which did not need his permission for withdrawals.
After this, he got a separate bank account and set up direct debits for his bills, not trusting anyone with his money in a long time.
People do have financial troubles and may see you as a way to help solve their financial problems with a joint account.
Either of you can also rack up a huge amount of debt and both risk to have a black mark on your credit report. Not to mention, if one wouldn’t be able to pay his part of the debt, the other is responsible to pay it all off.
Should You Have A Joint Bank Account? Click To TweetClosing a joint account
You can’t just cut up the card. There’s more to closing a joint account properly. See the steps below:
- Both need to agree — Advise your bank of a dispute between the joint account holders if there’s disagreement. They can put a temporary stop or freeze your account until the issue was resolved. They may also require both of you to authorise transactions on the account.
- Sort out direct debits and credits — A 13-month list of any direct credits and direct debits for your joint account can be requested from your bank. Inform your employer and anyone else who credits money into your account, including Centrelink.
- Zero balance — Before you can close the account, divide the remaining account balance as the balance must be zero.
- Confirmation — Once the joint account has been closed, you should receive confirmation from your bank.
