Joint accounts: what you need to know

If you’re moving in with your partner or getting married, it might seem like a good plan to combine your finances. This could involve applying for a joint mortgage, bank account or savings account.

However, although it might seem unromantic it’s a good idea to know the facts before you make such a big decision.

If you don’t know where you stand legally, you may end up being responsible for your partner’s debts or spending in the event of a split. If you have contributed to joint savings in unequal proportions you may not get all your money back


Which type of accounts can be joint?

Not all types of account or financial agreement can be joint. Personal loans, savings accounts and current accounts can all be opened in joint names.

Couples who buy a house together will usually have a joint mortgage. Those who rent will usually have both their names on the rental agreement.

However, individual savings accounts (ISAs) and credit cards will only be in one name.

Pros and cons of joint accounts

Co-habiting couples often have a joint account for household expenses, even if they keep the rest of their money separate.

Many find this can be a straightforward way of sharing money and managing expenses. If both people pay in an agreed amount each month, and household bills are paid out of the account, it can help prevent arguments about cash.

When it comes to taking out a mortgage you’ll be able to borrow more by making a joint application – the same goes for personal loans.

On the down side, if one partner has a poor credit history, a joint account will affect the other’s credit record and make it more difficult for them to get credit.

Some people also feel they lose some privacy with a joint account as both account holders will be able to see transactions made.

However, the biggest downside of a joint account comes down to trust. Do you trust your partner with access to your money? Should you? What will happen if you split up?

Joint liability

When you take out a joint mortgage, loan or current account (with an overdraft facility), responsibility for the debt isn’t split 50:50.

Instead, you and your partner are "jointly and severally liable" for the debt. This means either signatory is responsible.

It doesn't matter who spent the money or how the loan has been so far repaid, in the event of arrears creditors can pursue either party for repayments.

In short each of you could be asked to repay the full debt if the other person can’t or won’t.

Joint liability often becomes an issue when a couple split up. For example, if one partner leaves a property jointly owned it doesn’t mean they are no longer liable for the mortgage. However, they may no longer be willing to contribute to repayments if they are not living there. This can leave the other person having to pay the mortgage on their own or at the risk of repossession.

Likewise if a couple has a joint loan and one partner spends all the money, the other is still jointly liable for its repayment.

In short, any joint debts or financial agreements mean joint responsibility and liability. And if one other person doesn’t pay up, the other could end up with a lot of debt on their hands.


What to do if you split up

If you and your other half go your separate ways it’s a good idea to tell any lenders with whom you have joint agreements that you have split up and that you don’t want any changes to the account (i.e. the amount of the loan increased) without you being informed.

If you have a bank account with your ex, you should talk to them about closing the account. You will both need to sign the letter and the account must be in the black before you can close it.

If you have a joint mortgage you won’t be able to take your or your ex-partner’s name off the mortgage unless the lender is happy that one of you can afford the mortgage on your own – if you needed both your incomes combined to get the mortgage in the first place then this may be a problem.

If you have a joint savings account with your ex-partner, and they decide to withdraw the funds, it could prove very difficult, if not impossible, to get your share back.

What should couples do?

Many couples find that a joint account for all household bills and then separate accounts for personal expenses works well. If the joint account does not have an overdraft facility it lessens the chances of one partner racking up a debt on the account.

If you decide to get a mortgage with your partner it can be a good idea to seek advice from a solicitor about who owns what share of the property and who will get what if you split up – this is especially important if you have put in differing deposit amounts.

Technically there’s no such thing as a joint credit card. Only one person will have signed the agreement although they can agree to give a second credit card to someone else. However the secondary cardholder doesn’t have legal responsibility to make any payments to the credit card company.

If you’re named on the credit card account it’s your responsibility to pay the bills. If you and your partner split up, and you no longer want them to spend on the account, contact the credit card company and ask them to cancel the second card.

Money is often a key source of discontent between couples so it’s important to discuss any financial worries or concerns.

If you’ve any doubts about combining your finances with your partner because you’re not sure you can trust them, then the advice is simple: don’t.