How do joint bank accounts work? The pros and cons of joining finances with your partner

Whether you’re in a new relationship or a more established one, we examine whether a joint bank account is a good idea

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While the young may be shunning marital bliss, it seems that more over 50s are ready to try their luck again, with rising rates of remarriage later on in life according to the Office for National Statistics

Falling in love again is a wonderful feeling, but managing your money in a new relationship can be a headache, especially if you have some baggage from the past. Many couples choose to go all in and get a joint bank account, but should you?

Our expert financial journalist explains everything you need to know about joint bank accounts to help you make an informed decision if you're in a new relationship or if you're assessing how you manage your finances with your long-term partner. 

What is a joint bank account?

Very similar to your regular current account, a joint bank account is one that two or more people can use. You can both pay money in and take it out, get a debit card to use, have access to the online banking and mobile app facilities and, importantly, you are both liable for any debt you accumulate.

While normally used by married or cohabiting couples or those in civil partnerships, you can get a joint account with almost anyone, such as housemates, friends or other family members.

This might be your only account or you could choose to each have your own and open a separate account together for your joint spending, such as bills, holidays, trips to restaurants and gifts for the family. 

More banking advice from Smart With Money 

What are the benefits of a joint bank account?

If you want to open a joint account, then it is important that you are both totally clear on why you’re setting it up and how you are going to use it. There are some clear benefits, notably transparency over what is being spent, which can avoid awkward conversations down the line.

“This complete clarity over where all the money is going can make it easier to manage the overall household budget more effectively,” says Sarah Coles, personal finance analyst at Hargreaves Lansdown

“It also means you support each other with every household expense, and when one of you dies, the other can continue to access money in a joint account.”

What are the concerns over a joint bank account?

Before you both march straight off to the bank (or more likely download the app) to open up your joint bank account, there are things you should think about.

“Having to agree on everything means losing control of spending your own money,” says Coles.

“This could lead to more arguments about spending decisions—especially if you have different approaches to money or earn very different amounts.”

Given the fact that over two-fifths of us believe our other half spends too much, according to research from the law firm Slater and Gordon, you can see how arguments can start. If you are particularly careful with your money, but your partner is less than frugal, there is a risk that they could overspend on the account and run up debts for which you are both liable.

How could opening a joint bank account impact my credit score?

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By holding a joint bank account or taking out other forms of credit such as a mortgage, for example, you officially link your finances to that of the other person on your individual credit report. This is of particular concern if your partner has problems managing money, says Coles, “As you will have also linked yourself to those problems.”

Your credit report and score is what lenders use when deciding whether or not to lend to you and at what rate. The better your score, the more likely you are to be able to borrow using the cheapest deals because lenders know that they can trust you to pay back that money.

Linking your finances means you will be “co-scored” when you apply for credit, meaning that you are both assessed. If your partner’s score is terrible, it could bring down yours and therefore you could struggle to get credit personally. 

It’s not exactly romantic, but it’s really important that you both check your credit rating and share it with each other before you combine your finances.

The hybrid approach

If you are still keen to keep your financial independence then you could opt to open a joint account only for bills and keep everything else separate. Over a fifth of couples choose this option, according to Hargreaves Lansdown.

“It’s a good idea to retain a solo bank account, especially if you are coming together in your later years,” says financial coach Rachel Rowley.

This approach has the advantage that you can pay into the joint account in whatever way you both consider fair, and pay all bills out of it. Bills won’t get missed, but you still have complete freedom with the rest of your money to spend as you want. You also have “financial freedom within the relationship”, adds Coles, which can give you the security of having money of your own if you break up.

This sense of financial independence within the relationship is crucial, believes Rowley. “Relinquishing total financial control can cause anxiety and, at times, resentment. It’s important to retain some financial independence, to have some of your ‘own’ money—it’s more liberating, and can positively influence your confidence and your mood.

“Besides, how can you arrange a surprise weekend away if your partner can see everything?!” 

Joint bank account checklist

  • Be clear on why you are setting up the account
  • Check out each other’s credit scores
  • Decide if you want to go all in or keep your own bank account as well
  • Make sure when you open the account that both holders must be signatories to any changes made in the future to the account, not just one person
  • Manage carefully how much money is paid into the account, so you don’t run short

Georgie is the contributing editor for The Money Edit and also covers finance for Woman & Home.  Georgie is a multi-award-winning financial broadcaster and journalist and a trusted voice on all matters personal finance and consumer affairs, hosting a number of money podcasts and appearing regularly on TV, radio and in print.