Joint bank accounts have long been a popular choice among couples looking to manage their finances together. However, with most people assuming their relationship is rock solid and will stand the test of time, many overlook the potential problems that can arise in the event of financial disagreements, relationship troubles or a breakup.
Here are 5 questions to ask before opening a joint bank account with your partner.
Could their credit rating negatively impact yours or could yours affect theirs?
When you open a joint account with a partner, your credit reports will become ‘linked’. This means that when a lender wants to assess how credit worthy you and/or your partner are, they’ll look at both of your credit reports before deciding which products to offer – and whether to offer anything at all.
According to research from Experian, 15% of people in the UK believe their partner’s credit rating has reduced their chances of getting approved for credit. So although linking your finances to your partner’s may seem like the next step for your relationship, it’s wise to assess each of your scores individually before taking the leap.
It’s also worth keeping in mind that you’re equally liable if the account goes overdrawn, even if only one person has been using the money or monitoring the account.
Are your spending habits compatible?
It’s possible for you and your partner to be compatible in most aspects of your relationship while having incompatible spending habits.
While incompatible spending habits certainly don’t have to mean the end of the relationship, they’re often a signal that a joint bank account might not be the right move for you.
If you’re the type of person to track every penny but your partner is a reckless spender, issues could arise. Do you and your partner feel comfortable justifying your purchases with one another or would you rather maintain full independence over your spending?
What will the joint account be used for?
A potential solution to the dilemma above is to use the joint account solely for joint expenses such as mortgage, utilities, car costs etc. That way, you can keep separate accounts for day-to-day spending that doesn’t need to be discussed between the two of you first.
However, even if you go down this route, you still need to be honest with yourselves about your financial behaviour as individuals.
What happens if you break up?
This is the question very few couples bother to ask. When things are going well, it can be hard to envision why or how your relationship could end.
Without wanting to be Debbie Downer, please keep in mind that things can change and most relationships do in fact come to an end. If you and your partner split up, you’ll need to be proactive in separating your finances.
You may assume that you’d still treat each other with respect in the event of a break up, but even this isn’t guaranteed. I’ve heard of people splitting up after 25 joyful years together and suddenly finding it impossible to cooperate when it comes to separating shared finances.
Even when there’s no malice intended and each person wishes the best for the other, it’s natural to have disagreements over how the money should be divided.
If a relationship ends, there’s nothing to stop one partner withdrawing the balance for themselves. I spoke to Alice, 32, who found herself in this situation.
She said: “When me and my ex split up, he’d been living in the house I owned and we had a joint bank account which was used for essentials like the mortgage and bills. Since it was my house and not his, roughly 70% of what was put into the account each month came from my pay and 30% came from his. It was mostly my decision to break up and when I got back from work the next day he’d withdrawn £3,000 from our joint account and moved his stuff out of my house. I was angry that he’d taken the money without asking me – especially since most of the money was mine – but I do understand why he did it. He’d left the relationship with less than I did. I still had my house and could carry on mostly as normal. His whole life was different. I tried to get the money back from him for a few months but gave up in the end.”
Why are you getting a joint account?
Before opening a joint account with your partner, have a think about why you’re taking this step. See if you can list three reasons. Many people open joint bank accounts because they see it as a sign of commitment and maturity. They assume that since they trust one another, it’s the most logical step on their journey as a couple. However, joint accounts do have their downsides and it’s possible to be a committed couple without combining your finances in this way.
Many of the benefits that joint bank accounts offer can be found elsewhere.
For example, budgeting spreadsheets and apps can be a smart way of managing your finances as a couple without financially linking yourselves in such a formal way.
Instead of opening a joint account and transferring money into it each month, could you each take responsibility for certain bills and settle the difference? Perhaps one of you could pay the rent each month and the other could pay the council tax and utilities.