If you and your partner are saving for a goal such as a security deposit, you might consider opening a joint savings account.
If you have shared expenses such as household bills, a joint checking account can be helpful. But what about a joint savings account?
In this article we explain:
- What is a Joint Savings Account is
- Who can open a joint savings account
- The advantages and risks of pooling your savings
- What are the disadvantages of a joint account?
You might want to read: How do joint bank accounts work?
What is a Joint Savings Account?
Joint savings accounts work the same way as individual accounts, except that two or more people can contribute and withdraw the money. You don’t have to be:
- Married or PACS
- Live at the same address as other account holders
Each joint account holder should be able to view transactions on the account, deposit and withdraw money from it, and set up standing orders and direct debits.
Who can open a joint savings account?
Generally, anyone over the age of 18 with a permanent UK address can open a joint savings account.
You may be excluded from opening certain accounts if you:
- Are unable to pass basic credit and identity checks with a bank
- Do not already have a current account with the service provider, if this is a stipulation of the account you wish to open a joint account
Benefits of a Joint Savings Account
Joint savings can be very useful in certain circumstances. Here are some of the benefits:
- You can contribute together to a long-term savings goal, which means the balance should grow faster and you could attract a high interest rate on your savings.
- Both joint account holders can see progress towards this goal, which can motivate you to save more
- You can earn more interest on your money than if you kept it in a joint checking account. Some savings accounts pay high interest where balances are higher.
- Even if you keep your other finances separate, a joint savings account can ensure that you both (or all) earmark money for a specific purpose, like sharing expenses.
Read more: 10 challenges to save and budgeting guide
What are the disadvantages of a joint account?
While there are many reasons to consider joint savings, such as easier money management, you should proceed with caution, as there are also risks.
- Your partner or joint account holder may have a different attitude towards money than yours, which could affect your relationship
- In most cases, both joint account holders can withdraw money without prior agreement, so there is nothing to prevent one of the parties from withdrawing money and refusing to pay it back.
- Your partner will be able to see what you’re buying with the cash out – so there’s not a lot of privacy
- It can be difficult to close the account without a partner’s permission
- Savings accounts don’t count against your credit history like checking accounts and credit cards do, but by signing up for any financial product together, your joint finances will be linked to your partner’s on the credit card system. credit rating – and it could affect your credit rating. if they have a low credit score
When does it make more sense to have a joint savings account?
A joint savings account is useful if you are:
- Saving together towards one big goal such as a security deposit
- A couple where one member is not currently earning money, perhaps due to childcare responsibilities, but both account holders should have access to withdraw money
- Set aside savings for a specific purchase, like a new kitchen or a new car, that you want to do together
- Able to receive a high interest rate on your savings if your balance is higher, in which case pooling your resources could lead to higher returns
Open a joint savings account
To open a joint account, you will need to do the following:
- Provide proof of identity and proof of address, unless you both already have an account with the bank with which you are taking out the joint account
- Accept a credit inquiry from a new supplier
- Fill out an application form
- Sign a “mandate”, which will state what the rules are on who can withdraw money from the account, how to close the account if necessary, and who earns interest from it (this is important because it counts towards your personal tax-free account ). savings allowance up to £1,000 savings interest)
Frequently Asked Questions
Can I have joint and personal savings accounts?
Yes, you can have a personal account and a joint savings account, and you can hold them with multiple providers.
What happens when one of the co-holders of the savings account dies?
Usually, joint accounts are held by people as “joint owners”, which means that if one of the owners dies, the money goes to the survivor(s); the death certificate will suffice for this transfer to take place.
However, people sometimes instead sign a declaration of trust stating that they hold the account as “tenants in common”, which means that the deceased’s share becomes part of their estate to be distributed under a will – rather than automatically to the surviving holder. (s) of the joint account.
Some couples with a joint savings account might consider setting up powers of attorney, so that the partners can make financial decisions for each other in the event of injury, illness or old age preventing one account holders to make these choices for themselves.
Read more: Lasting power of attorney: why it is important to establish one
Can you have a joint savings account without being married?
Yes, it is not necessary to be married or in a PACS to hold a joint savings account.
What can I do if things go wrong?
If you and a partner are having a fight and you’re worried they’ll drain a joint bank account, you need to act fast. You can call the bank and ask them to freeze the account, although both joint account holders must agree to unfreeze it. If you have a direct debit on your account, now might be a good time to stop it too.
Usually, if you separate from a partner, the money in a joint account belongs to the person who contributed it, although if you divorce or have children, there may be other claims. You may need to use mediators or a divorce settlement in court in these cases.
How do I close a joint savings account?
You can usually close an account by visiting a branch or by filling out a form which is then signed by all account holders. If you have direct debits, be sure to cancel them as well. You may need an ID.
How is the money protected in a joint savings account?
Your money is protected against bank failure by the Financial Services Compensation Scheme (FSCS). The limit for this scheme is £85,000 per person protected by banking license, so a couple’s joint account is protected up to £170,000 – as long as neither party has another account with them. from the same bank.
