What is a joint bank account?

A joint banking account is a transaction or savings account that two or more people hold together; both (or all) account holders can access the account to deposit, withdraw or transfer funds. Joint accounts are generally held by couples, members of the same family or business partners so that they can share expenses like bills, mortgage or rent, or contribute to savings.

The different types of joint account

It’s possible to open a joint transaction account, a savings account or a joint term deposit in Australia.

A joint transaction account

This is just like any other everyday bank account that you can use for paying bills, depositing and withdrawing money and transferring funds to other accounts. The difference is that all of the account holders have a debit card that links to the account, as well as access to an app for mobile or internet banking.

You can use a joint transaction account to set up a direct debit for your rent or mortgage, or pay bills and grocery expenses, as well as using Apple, Samsung or Google Pay if the bank supports these facilities.

A joint savings account

In the same way as a joint transaction account works, a joint savings account allows two or more holders to deposit funds into it from other accounts and to earn interest on the balance. If you’re wondering how to save for a home deposit, for example, then a joint savings account can help you to reach that goal.

A joint term deposit

A term deposit is another account, often a couples’ bank account, that can be a good way to save money for a target or goal. With a joint term deposit account, you agree to fund the account with a certain amount of money and then leave it for a pre-set term at a fixed interest rate. Term deposits range from one month to five years and the money is locked away for the period you choose. Once the term deposit matures (when the term comes to an end) you get your initial deposit amount back plus the interest that’s accrued.

Looking for joint accounts

When you’re looking for a joint account, you should head to a comparison site and check out the features of the products on offer. There are different priorities for each type of account.

For transaction accounts, low maintenance, ATM and transaction fees is ideal, whereas with savings accounts, a high interest rate, affordable monthly deposit requirements and some penalty–free withdrawals are best. If you’re looking at term deposits, then a term length that you agree on, alongside an attractive interest rate, is what you should aim for.

The benefits of joint accounts

Having a joint account makes joint expenses much easier to manage. Instead of transferring money back and forth for bills, groceries and other expenses, you can simply put a set amount of money into this account each month.

If you have any money left in your joint account at the end of each month, then you can transfer it into your joint savings account to add to the regular amounts you both contribute. Many savings accounts have a minimum monthly deposit amount in order to maintain a bonus interest rate and it’s easier to achieve this minimum if there’s two of you putting money in.

As each account holder has their own access, it’s possible to make joint purchases without the other holders being present. Each person also has their own login for independence.

There are some risks involved

The fact that two or more people have access to the account can have its downsides. If one account holder is less careful, or even dishonest, then there’s nothing to stop them withdrawing the money.

All account holders are equally responsible for any overdrafts, whether they’re arranged or not. You’re not responsible for “your half” of the debt, you’re both responsible for 100 per cent of any amounts owed, regardless of who ran up the debt. Quite simply, someone else’s bad financial habits could affect your credit rating, which it why it’s important to only open a joint account with people you trust.

If you separate, there may be some unpleasant wrangling over the money in the account and there’s always the risk that one party may withdraw most or all of it.

There’s also a lack of privacy involved, as all holders can see what the others have been spending money on.

Things to consider before opening a joint account

Do you and your partner, friend or relative have the same spending habits? If you like to save and your other half likes to shop, you’ll need to agree on a spending limit each month. Similarly, work out what your savings goals are and decide how much you’ll both be depositing into your saver each month.

What do you consider to be shared expenses? Things like mortgages, groceries, childcare and similar are obvious shared outgoings, but hobbies, magazine subscriptions and clothes aren’t. Define what’s shared and what isn’t.

What is sexually transmitted debt?

Do you trust one another? There’s such a thing as sexually transmitted debt, which is when one half of a couple burdens the other half with the results of their bad spending decisions. Even if it’s accidental, it can be disastrous both for credit ratings and the relationship.

Typically, one person in the relationship creates a joint debt or an overdraft that the other person ends up having to repay. That is sexually transmitted debt and can last longer than the relationship itself.

So joint accounts and joint debts need to be carefully considered before opening. Two names on one account means tying yourself financially to another person.

How will you deal with a large discrepancy in income? If one of you earns significantly more than the other then you’ll have to decide how to split the contributions so that everything’s fair.

Will one or both of you maintain an individual bank account? Many people have a shared account as well an individual account for privacy and autonomy.

Compare savings accounts, transaction accounts and term deposits at InfoChoice.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

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