A joint account is a bank account that more than one person can access. It can make it easier to manage shared expenses, but also comes with the risk of sharing access to your money.
A joint account can be any kind of bank account: savings, transaction or term deposit. The type you choose depends on who you’re sharing the account with and your goal. For example, you might choose a savings account if you and your partner are saving for a house, or a transaction account if you are sharing rent and groceries with housemates.
Benefits of joint accounts
Opening a joint account can have benefits:
It’s easier to pay for shared expenses from one account
You’ll have fewer bank fees to pay
All account holders oversee the money
A shared account for shared bills
You and your partner may decide to keep your money in separate accounts, but open a shared account for your shared bills. Discuss with your partner what bills you will pay with your shared account and how much you each will contribute.
Risks of joint accounts
When you have a joint account, you’re sharing your money with another person or people. It’s important to think about whether you want to do this.
Shared access to the money
Having joint access means the other account holders can take the money in the account.
Some accounts only need one account holder’s signature to access the account. Other accounts need all to sign. Consider which option works best for you. Are you happy for other account holders to access the money without your signature? Are they happy for you to do the same?
Transaction accounts come with debit cards that account holders can use to withdraw cash and buy things. Think about who will have debit cards and how they use them.
Be wary of anyone who pressures you to open a joint account. The joint account holder will have access to any money you put into the account.
Responsibility for debt
When you have a joint account, you share responsibility for any debts.
Be aware that if another account holder runs up a debt they can’t pay back, you could all end up with a bad credit report.
How to open a joint account
Once you’ve chosen an account, contact the provider. They will guide you through the application. Usually, all account holders need to go to the bank in person to sign the documents.
How to close a joint account
If you need to close a joint account, follow these steps to make sure it is closed properly.
1. Agree to close the account
All account holders need to agree to close the account before the bank will allow you 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 will help you work out which ones you need to cancel or redirect to a different account.
3. Clear all funds in the account
If your account is overdrawn, make sure you pay it off. If there’s money left in the account, divide it between yourself and the other account holders.
4. Call your bank
Call your bank and ask them to close the account. All account holders need to be present for the call — the bank will need to verify each account holder’s identity.
5. Get confirmation from the bank
Ask for confirmation of the account closure in writing and keep a copy for your records.
Costa’s girlfriend takes him for a ride
Costa works interstate a lot. He decided to open a joint account with his girlfriend, Jenny. The joint account meant he wouldn’t have to worry about paying his bills when he was away. Jenny would arrange it for him.
A few weeks later, Costa checked his account to make sure his boss had paid him that week. He was shocked to find there was no money in the account. Costa tried to contact Jenny but she wouldn’t return his calls. He rang his bank and found she had withdrawn all his money. She could do this as it was a joint account that did not need his permission for withdrawals.
Costa decided to get a separate bank account and set up direct debits for his bills instead, so they can be paid automatically.
This article was originally published at https://moneysmart.gov.au/banking/joint-accounts
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