How we conduct our finances is often down to the individual. But there are times when sharing finances with a partner can make a big difference. And I’m not talking just current accounts – I’m also talking joint savings accounts.
So let’s break down when having a joint account might make sense and what the real considerations are.
Lots of couples choose to have a joint current account. The possible advantages are obvious: it helps with covering household bills and shared expenses, and it may make it that bit easier to manage money together. However, whether to set up a joint savings account may not be such a clear decision to make.
Savings accounts aren’t really for day-to-day banking. So you may not have a noticeable need to set up a joint savings account. But savings accounts are great for giving you a focus for your finances. If you are saving towards a large goal such as a house deposit or a new kitchen, pooling your resources could be just the thing. A joint savings account can mean that reaching your savings goal is not just a solo effort.
If you want to understand a bit more about savings accounts, take a look at our handy savings guide.
The main benefit of a joint savings account is that both you and the person you share the account with can add to the balance at any time. So, as a result, your savings pot is likely to grow that bit more quickly. There is no faff transferring money between individual accounts. And keeping track of who is contributing what becomes simpler: it’s all there in one place.
Just an aside: you also receive a little extra protection if you have a joint savings account. Under the Financial Services Compensation Scheme (FSCS), savings up to £85,000 are protected in each financial institution. But as this is based on the individual, when it comes to a joint account for two people, the amount protected is actually £170,000. So that is why it may make sense, if you are looking to save towards something big, to do it with a joint account.
As with anything in life, there are pros and cons to setting up a joint savings account. Here are a few things to be aware of if you are thinking of setting up an account with someone else.
Firstly, both of you have equal access. So there is no need for your account-holding partner to check with you before withdrawing money. This could cause tensions and disagreements along the way.
Secondly, it can be that much harder to close an account that is shared with someone else. So if for some reason you did part ways with your co-account-holder, you would both need to agree to close the account and divide the balance between the two of you. However, if there is any disagreement over closing the account, it is usually possible to freeze the account until a solution can be found.