Thinking About Opening A Joint Account? Here’s What You Need To Know

It’s no secret that financial compatibility plays an important role in relationships.

Opening a joint account have been a long-standing tradition with couples combining their finances. But according to two surveys by Australian banks, the majority of couples now prefer to keep their finances separate.

In other words, the number of joint accounts is declining in popularity.

So is it necessary to open a joint account? The following information will help you decide which way to go.

What is a Joint Account?

A joint account is a bank account that allows more than one person to access. The purpose of a joint account is to make it easier to manage shared expenses.

A joint account can be any type of bank account – savings, transaction or term deposit.

The type you choose depends on what your goal is. For example, you may choose a savings account if you and your partner are saving for a house.

A transaction account is if you are sharing rent, groceries, utilities, etc.

Benefits of a Joint Account

The benefits of opening a joint account mean that:

• It’s easier to pay for shared expenses from one account.
• You’ll have fewer bank fees to pay.
• All account holders oversee each transaction.

You can open a shared account for shared bills if you and your partner decide to keep your money in separate accounts.

Just make sure you discuss what bills you will pay from your shared account and how much each of you will contribute.

Risks of a Joint Account

• You’re sharing your money with another account holder.
• Other account holders can take the money without consent (in an event when things go sour in a relationship).
• You share responsibility for any debts.
• Be aware that if the other account holder runs up a debt that they can’t pay back, you could end up with a bad credit report.

An account holder’s signature is an authority to access the account. Some accounts only need one account holder signature while others require all to sign.

Consider which option works best for you.

Ask yourself the following:

• Am I happy for other account holders to access the money without my signature?
• Would my partner be happy to do the same for me?

How to Open a Joint Account

Contact your bank once you’ve chosen an account. They will guide you through the application process.

In most cases, all account holders will need to visit the bank to sign the required documentation.

How to Close a Joint Account

Follow these steps to ensure that it’s closed properly.

1.   Agree to close the account

The bank won’t allow you to close the account until all account holders agree to close it

2.   Check your direct debits and credits

Ask the bank to give you a list of all direct debits and credits from the last 12 months. This is to help you work out which ones you need to cancel or redirect to a different account

3.   Divide the funds

If there’s money left in the account, divide it between yourself and the other account holders.

4.   Call your bank

Closing your account can be done over the phone as long as all the account holders are present during the call. The bank will verify each account holder’s identity.

5.   Get confirmation from the bank

Always ask for confirmation of the account closure in writing to keep for your records.

Final Word:

Before opening a joint account, you should discuss your financial goals and habits together.

Here’s what you both need to agree on:

• how much is deposited, and
• how frequently each person contributes and what expenses are to be paid out of the account.

More importantly, the person who approves the transaction is the person who signed the authorisation form. So, if it’s a joint effort, then make sure both signatures are listed. 

This is important because it will determine how the account is used.

Do you have a joint account or considering opening one? I would love to hear from you.

Are you in need of financial advice? Phone me, Benjamin Collins on (07) 3041 1382. Alternatively, send me a message on LinkedIn.