When it comes to finances, most people have a slightly different take on what is the ideal set up. And across the spectrum of living situations – from married couples, to couples living together, to flatmates with shared living costs, there are many instances where two people may decide the time is right to open a joint bank account. But of course, with any money related matter, there are both pros and cons to such an account; here, we take a look at the advantages and disadvantages.
Paying bills can be more straightforward – It may seem like an obvious point, but according to moneysupermarket.com’s Money Expert, if two people share an account, all shared living costs (gas, electric, council tax etc.) can be set up to debit from the shared account; and both can see everything to do with the shared finances. It also saves any time and hassle of remembering to continually transfer each other money each month to cover shared bills.
Potentially less financial fallout – According to The Money Advice Service, some couples find that a joint bank account can prevent potential money-related arguments, as if both parties pay in an agreed set amount of their salary – and have an agreement on how it’s managed – there’s a mutual understanding and trust regarding shared finances.
Saving can be easier – Thinkmoney.co.uk reckons that a shared bank account can enable couples to better budget for future costs, including saving up for a holiday or a wedding. And it also allows you to better track your joint monthly spending.
Less privacy –Even in a trusting relationship, it can be viewed as a big step sharing a bank account – giving your significant other access to view every which way you spend your money month to month (provided you use the account for your personal expenses). That’s the view taken by The Money Advice Service, who added that if one of the two account holders withdraws money, there’s little the other can do to get that money back.
Ratings are at risk – The Money Advice Service also advises against a joint account if there is a sizeable difference between a couple’s credit scores. The organisation takes the view that, if one of the couple has a bad credit rating, it has the potential to affect the other account holder’s rating, as when a joint account is opened you will become ‘co-scored’.
Unfair responsibility could befall you – According to moneysupermarket.com, in the unfortunate event of one person no longer paying in (perhaps a bad break up), and the account becomes overdrawn, you would still be held liable for all costs related to the account – and could see your credit rating negatively affected if payments weren’t met.
This quick overview of the pros and cons of a joint bank account highlights the importance of taking the time to carefully consider how your own personal circumstances stand against the points above.
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