Everything you need to know about joint bank accounts

Joint bank accounts are almost exactly the same as current accounts for individuals. The only significant difference is that joint accounts are held in the name of two or more people, while individual accounts are held in one person’s name.

Joint accounts can be opened by couples, cohabitees, or almost any other group of people, so long as all parties meet the bank’s eligibility criteria. Joint accounts can be very useful if you share a house or have other shared expenses, but they shouldn’t be rushed into: you should fully understand your obligations and the potential pitfalls of holding a joint account before applying.

Setting up a joint bank account

Applying for a joint account is almost as straightforward as it would be for multiple people applying for their own individual accounts. Each potential account holder must complete the application form, providing their personal, residential, employment and income data. This must be submitted alongside details of who is authorised to use the account and in which ways.

This information is contained within the mandate establishing the account. It’s important to consider your mandate carefully before submitting it, since it will affect the way the account can be used and it could require the agreement of all parties to alter. For example, requiring two signatures to set up a direct debit or standing order might seem like a good idea, but it can make paying bills a bit painful.

Once all the required information and the mandate have been submitted, the bank will undertake credit and identity checks. Assuming you meet the bank’s eligibility criteria you should be accepted for an account.

If you already have an account and you’re switching your bank, you will also need to complete documentation regarding your old account, so your new account can be switched in 7 days to your new provider.

Can you open a joint bank account online?

Yes, most banks and building societies will allow you to apply for a joint bank account online, but you may need to go into a branch to provide proof of identification and address, as well as your income and employment details. 

Most of the big banks will allow you to operate joint accounts online and via mobile banking apps, providing you do not require all account holders to sign for transactions.

How to close a joint bank account

If you need to close a joint bank account, you’ll need to decide between you what will happen to any direct debits or standing orders on the account as they will either need to be cancelled or moved to another account. You’ll also need to decide how the money in the account will be shared out and, if you have an overdraft, how that will be paid off. 

If you can’t agree on how the account will be closed, you’ll need to cancel the joint account mandate which will mean that neither of you can use the account until you’ve reached an agreement. 

What happens to joint bank accounts on death?

If one of the account holders dies, money in the joint account will usually be passed to the surviving account holder without the need for probate. The bank may need to see the death certificate before money can be transferred and the account changed to a sole account. 

Note that if the account has an overdraft, the surviving account holder will be responsible for repaying it. 

What happens to joint bank accounts on separation? 

If you and the other account holder separate, you can continue to use your joint account, but it’s usually better to close it and open separate accounts. To do this, you’ll both need to give your permission and agree how any regular payments or debts will be settled. 

Again, if there is a dispute between the two of you, you’ll need to cancel the joint account mandate so that the account cannot be used until you’ve come to an agreement. 

Once you’ve closed the account, you may want to contact all three credit reference agencies - Experian, Equifax and TransUnion - to issue a ‘notice of disassociation’ so that you are no longer financially linked to the other person. This means that their financial circumstances will not affect any future credit applications you make.  

How to remove someone from a joint bank account

To remove someone from a joint bank account, you will usually need to give your bank written instructions signed by all account holders. You will need to provide details of the account, the name of the person you wish to be removed, and the date you wish this to happen. 

Can you get a 3-way joint bank account?

Although it’s most common for a joint bank account to have two account holders, some banks will allow three or more people to be named on the same bank account. 

Why should you get a joint account?

The main advantage of holding a joint account is simplifying household finances.

Once created, a joint account can be used to pay joint bills like rent, mortgage, or utilities. They are very popular with cohabiting couples: rather than splitting the bills and keeping track of who has paid what, you simply pay an agreed amount into the joint account, and then you pay the direct debits and shared expenses from there.

Joint accounts are also popular in situations where one member of the group earns the majority of the household income. Rather than handing over cash for living expenses to the other party, they can simply pay money into a joint account which everyone can access.

The other advantage offered by joint accounts is that every member of the group gains discounted access to the benefits available from a packaged account. This is because most packaged account providers do not charge a premium for multiple account holders.

Should married couples have joint bank accounts?

If you’re married, having a joint bank account can make managing your finances and paying for bills much easier. But ultimately whether you should have one will depend on your circumstances and your attitude to money. 

Before taking out a joint account it’s important to discuss exactly how you will use the account to ensure you both feel comfortable. It can also be worth writing down a plan for what happens if something goes wrong so you both know where you stand. 

Why might a joint account be a poor choice?

Although joint accounts can be a powerful tool for managing your finances, there are circumstances when a joint account doesn’t make much sense.

Since joint accounts are mainly used by couples, the primary consideration should be whether the relationship looks destined to last. Bear in mind that you both might have a different opinion on the long-term health of the relationship. Joint accounts can add an additional layer of complexity to any breakup, so carefully consider this before applying.

You should also think very carefully before applying if one of you has had a poor history of credit, since joint accounts will establish a financial link between all account holders in their credit files. If any of the parties have a lower credit score than you, your own credit file could be affected. Obviously, if you’ve spent a long time nurturing a good credit rating, and want to be accepted for the best credit products in the future, this might be a deal-breaker.

Equally, if you think that your partner or cohabitees don’t possess money management skills that match yours, you should think twice about opening a joint account – or at least adjust your mandate accordingly. Overdrafts established in joint names are the responsibility of all parties, regardless of whose spending created them. Banks can choose whether to pursue all parties or just one of the account holders for repayment and usually, they will opt for the path of least resistance.

So, if you have a good income, and your fellow joint account holders don’t, the bank will probably seek to retrieve their money from you. Whether you ever get this money back from your fellow account holders is not their concern.

Can you switch a joint bank account?

Yes, you can move your joint account to a new bank using the Current Account Switch Service which means your new account will be up and running within 7 working days.

15 December 2020