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The pros and cons of joint bank accounts

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Combining your money in one account may be convenient but there are downsides to co-mingling funds.

You’ve moved in with your partner and the question of combining your money in a joint account comes up. What do you do? Shudder at the thought of losing your financial independence or accept it’s the obvious way to manage your household finances?

Our straw-poll this week revealed that 15% of people have a joint bank account only, 60% have a joint account as well as their own, and 25% do not have a joint bank account.

The convenience factor probably makes a joint account seem appealing, especially when it comes to shared bills. It’s also, of course, a big expression of long-term commitment and trust.

But having one account isn’t right for all couples. Research from GoCompare shows that younger couples, and women particularly, are more likely to want to keep their money separate. And many couples are opting for separate finances with a joint account on the side.

If you’re on the fence about a joint account having both may seem like a good solution. But bear in mind there are potential pitfalls to pooling your pounds.

The first downside is that you (or your partner) may feel uncomfortable with someone monitoring your spending. You might be quite carefree with your cash, while your partner might scrutinise every penny that leaves the account. How would it make you feel to have a set of eyes watching everything you buy? Would this lack of privacy be good for your relationship?

If you’re looking for a good interest rate, you could also miss out by combining funds. Several current accounts currently offer attractive rates – for example, you can get 5% from Nationwide on balances up to £2,500. But if you open a joint account rather than two single accounts, you halve the amount that will earn the good rate of interest.

There are also practical issues. If your partner has a poor credit score, your score might suffer because you’re associated with them via the joint account. In fact, if one of you has a poor credit history, it’s better not to open a joint account.

Being married or living with someone doesn’t matter in terms of your credit score but having a joint account does. You can check your credit score using a credit reference agency such as Experian or Equifax.

Another negative is that you’re equally liable if the account goes overdrawn, even if you know nothing about it.

“The bank will not distinguish between you and your partner when it tries to get its money back, and if your partner can’t pay or isn’t around, the liability will be yours alone,” says Kevin Pratt, consumer affairs expert at MoneySuperMarket.

Issues can also arise if your relationship ends. The joint account can be vulnerable to one partner withdrawing the balance and leaving the other high and dry.

“It’s easy to see how arguments might develop,” says Pratt.

“If you suspect trouble is coming down the line, you can ask the bank to cancel the mandate, which will effectively freeze the account. It will only be unfrozen when both agree on what should be done with the money.”

Opening a joint bank account is a personal choice and you shouldn’t feel pressurised into having one. If you’re nervous about the idea, it’s probably best not to do it.

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