BSB 806 015

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BSB 806 015
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& My money

More than love: Joint bank accounts

A couple using a tablet device in a cafe

Opening a joint account should be more than a decision of the heart. People have used joint bank accounts for years, but it's important to weigh up the benefits and risks of having one.

A joint bank account allows two people to have an equal status with one account. This type of account does have advantages and may be worth checking out when you're trying to decide how to split bills or make a budget with your partner. There are also risks involved, which you should be aware of before you commit.

Different types of joint accounts

If you're considering opening a joint account, there are a few things to be aware of so you know that you're getting the right account for your needs.

  • Both to Sign 
    A 'Both to Sign' joint account will only let the account holders withdraw funds if both joint account holders' signatures are present. This is a good option if you want restricted access to the account whilst you save for something special such as a holiday, boat or first home.
  • Either to Sign 
    An 'Either to Sign' joint account is more common, and more flexible with the digital access options available today. This type of account will let either party withdraw or transfer funds as they see fit.
  • Adding additional card holders
    If you have an account with card access, your card issuer may give you the option of letting a second person have a card linked to the account. This is called making someone an 'Authorised user'. In this case, even though your account has a secondary card holder, you alone will be responsible for all transactions and money owing on the account.

Benefits of a joint account

There are times when opening a joint bank account can benefit both parties. It can simplify the saving process, as well as having other benefits:

  • Open the lines of communication
    By having a joint account, you have to communicate with your partner about any financial issues that may come up. This can help to curb your overall spending because you'll have to be accountable for what you spend.
  • Budgeting is easier
    If you pool both of your incomes into a separate account for bills, you'll know exactly what you have to spend for the rest of the month. This will make it easier to stay on budget each month. If you have an unexpected expense, you'll know exactly where you are financially after it has passed.
  • Better manage your finances
    Once you establish your joint account and finalise your budget, you can start to arrange your bill due dates around payment days. For example, if you have a credit card and you get paid on the first and the fifteenth of the month, call your lender and arrange to pay them around these dates. That way, you won't have to try and set money aside to cover those bills. They'll come straight out of the account when you get paid.
  • Mortgage Offset account
    If you're going to apply for a mortgage, a joint account could be a good option to save you money. A mortgage offset account can allow you to potentially save thousands over the life of your loan because any money in the account is offset against your loan amount, reducing the balance.

Risks of opening a joint bank account

Even though there are many great benefits of opening a joint bank account, it also comes with risks. It is up to you to decide if the risks are worth it.

  • If you're used to being independent and spending your money without answering to anyone, a joint bank account could be a rude wake-up call. Money issues could lead to relationship issues, especially if you don't communicate with the joint account holder properly.
  • If you pool all of your money into a joint account and it's an 'Either to Sign' account, you run the risk of losing your money. Your partner could withdraw it all without consulting you, and there is no recourse legally as you have authorised the 'Either to Sign' access.
  • When you share your finances in a joint account, you lose your financial privacy on that account. All of your transactions are visible to both you and your partner. This may also cause either party to feel restricted and can also be tricky when you're trying to spend money on your partner!

How do you get a joint account?

To open a joint account, you will need to open a new account in the name of both parties. Usually you will need to go into a branch to provide identification to open the account.

If you're considering opening a joint bank account, it is important to weigh all of the benefits and risks before you make your decision. There are lots of advantages, but it's always a good idea to talk it over with your partner and set clear expectations from the beginning so you don't run into issues once the joint account is open.

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