Joint bank accounts

Money Advice Service

A joint account lets you manage any money you share with your partner, housemate or others. It’s really convenient for shared expenses, but there are always risks to giving several people control of a single account.

What is a joint bank account?

Research by National Savings & Investments revealed that 46% of men and 40% of women have a joint account with their partner.

With a joint bank account, two or more people are able to access the money in the account.

Joint account holders can all pay into the account and pay bills, write cheques or withdraw cash (although sometimes more than one person needs to agree to this).

Joint accounts are mostly used by:

  • Married couples, civil partners and couples who live together
  • Housemates who have shared expenses

If you need longer-term access to someone else’s finances – for example, if you have an elderly relative who’s having trouble keeping on top of their money – a joint account is not your best bet.

Joint bank accounts – The pros and cons

If you have any doubts about whether to set up a joint account, don’t do it. Even if you want to split everything 50:50, you don’t need a joint account to do this.

  • A straightforward way of sharing money and managing expenses, such as bills and mortgage or rent payments.
  • Some couples find that having a joint account – and having clear guidelines for how to manage it – can help prevent arguments about money.
  • If one of you has a poor credit history, it’s not normally a good idea to open a joint account. Just living with someone, or being married to them, will not affect your credit rating but as soon as you open a joint bank account together you will be ‘co-scored’.
  • You lose some privacy. If you use the account for personal expenses, the other account holders can see the transactions.
  • If one of the account holders takes money out of the joint account, there aren’t many options for getting it back.
  • If the account becomes overdrawn, each joint account holder is responsible for the whole of the money owing; so you could become liable for repaying the other person’s debt.

Joint accounts for Universal Credit payments

If you and your partner are claiming Universal Credit, you’ll get a single payment for your household rather than individual payments for each of you.

However, you don’t have to open a joint account for this payment to go into.

Instead, you’ll be asked to nominate an account to have your money paid into and this can be either:

  • A single account in either your name or your partner’s name, or
  • A joint account in both of your names

Opening a joint account

Opening a joint account isn’t so different from opening a normal current account.

Each account holder just needs to fill in their section of the application form and provide proof of address and proof of identity.

Tax-free savings

Basic rate tax payers can earn up to £1,000 interest on their savings without having to pay tax and higher rate tax payers can earn up to £500 worth of interest tax-free. Find out more on Tax on savings accounts.

Speak to your bank during the application process, and ask them to explain:

  • Who, if anyone, can take out money without getting permission from others on the account
  • How overdrafts will be handled – typically, each account holder is responsible for paying back all the money owed and the bank might take money from someone’s sole account to cover the overdraft in the joint account
  • How to handle disagreements or the end of a relationship between joint account holders

The formal agreement on who gets to do what with the account is called the ‘mandate’ or ‘authority’.

All account holders have to sign the mandate when you open the account.

When it comes to interest, in most cases this is split equally between both account holders and will go towards each of your Personal Savings Allowances (PSA) – the amount of savings interest you can earn each year tax free. If you are in different tax brackets, the interest is still split evenly. You can read more about the Personal Savings Allowance on our site.

If things go wrong

How to handle disagreements with other account holders

If you’re having problems with your fellow account holders, cancel the mandate.

This will freeze the account so no one, including you, will be able to withdraw money.

Your bank will only unlock the account once everyone agrees on how to split the money.

And, if you can’t reach an agreement, the only option might be to let the courts decide who gets what.

If your bank or building society goes bust

Just like other accounts, joint accounts are protected by the Financial Services Compensation Scheme (FSCS).

For joint accounts, the FSCS assumes that each account holder holds an equal share.

So, for a two-person joint account, you could deposit £170,000 – £85,000 each – and it would all be protected, assuming you have no other savings with the authorised institution.

This article is provided by the Money Advice Service.

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