What you need to know about joint accounts

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Joint accounts will chain you together

Opening a joint bank account with someone can be more of a commitment than marrying them. Once you’ve opened the account, you become financially linked, so it’s important to understand what this means.

First, be careful who you open a joint account with. Whether you’re setting up an account with a housemate or partner, make sure you know and trust their financial habits. Even if it’s not you that runs up an overdraft on a joint account, you are jointly liable for the debt, which could badly damage your credit rating. Banks may even be able to withdraw cash from a single account you hold with them to cover debts run up by your joint account holder.

When you set up the account, you will sign a formal agreement (the “mandate”) setting out who gets to do what with the account. Depending on the bank, you may be able to set it up so that one person cannot withdraw money without the permission of other account holders, or require transactions over certain amounts to be signed off by all. Without this, one person might be able to withdraw all the cash, whether or not the money originated with them.

If you fall out with your joint account holders, make sure to cancel the mandate on the account. This will freeze the account, meaning no one, including you, can withdraw money. The bank won’t unlock the account until all account holders (or the courts) have agreed what will happen to the money.

Note that closing a joint account doesn’t sever your financial connection with the other account holders. You will need to inform the credit-rating agencies that you want to be financially disassociated from the person. Otherwise their credit rating could continue to affect yours.

The best joint accounts

Although joint accounts aren’t any different to standard current accounts, below we have listed the best current accounts for the various situations in which you’re most likely to require a joint account.

Best for bills: If you want to open a joint bank account so that you and your housemates or partner can pay household bills, then your best option is going to be an account that pays you cashback on bill payments. Santander’s 123 Lite account can be held as a joint account and it pays up to 3% cashback on bills. Unlike Santander’s main 123 account, the Lite account doesn’t pay interest, but it has a lower monthly fee of just £1. Given that you are unlikely to maintain a high balance in a bills account, this could make it a better option.

Best for saving: Another reason to open a joint account is to save together for a holiday, car or home. A good option here is a regular savings account, so long as you don’t plan to deposit more than around £500 a month. Nationwide pays 5% on its Flexclusive Regular Saver, which can be held jointly with you both paying in from separate current accounts. However, to get this rate, one of you will have to hold a Nationwide current account. Alternatively, you could opt for a high-interest current account such as TSB’s Classic Plus account. This pays 3% interest for every month that at least £500 is paid in.

Best for spending: If you want a joint account to pay for nights out and joint purchases, then TSB’s Classic Plus account is again a good option. The account pays a £5 monthly reward if you use the debit card at least 20 times that month, on top of the 3% interest rate.

In the news this week…

n “Black boxes”, the telematics devices which track how, where and when a vehicle is driven, have long been used by young drivers to lower premiums, but they are starting to be used for older drivers too, says Sam Meadows in The Daily Telegraph. Indeed, insurance premiums jump by an average of 17% a year for the over-50s. Insurers Admiral, Insure the Box and the RAC already offer telematics-linked policies for the elderly and have partnerships with suppliers who install the boxes, but you can now buy a stand-alone box and install it yourself, thanks to technology start-up Etouch Solutions.

They allow the driver, and anyone else he or she permits, to monitor their driving via an app. Although over-70s are legally required to renew their licence every three years, for the elderly and their relatives, it is a useful – if controversial – way of keeping tabs on the “bumps” that could lead to a “catastrophic” accident. It could also save older drivers money, although estimating an average saving would be difficult, says Confused.com. 

n Three of the four biggest mobile-phone providers – Vodafone, EE and Three – are “overcharging loyal customers” by as much as £38 a month, says Nina Montagu-Smith in The Sunday Times. Many people are getting caught out by taking out phone contracts with the price of a new handset included in the deal, says Citizens Advice.

If, after two years – the usual period for paying off the cost of the handset – you fail to upgrade your phone or switch to a Sim-only plan, you are still “effectively charged for the old one”. Over 65s are the most likely to be “caught out”: nearly a quarter of those surveyed had stayed with their provider for at least a year after the end of their fixed-deal period, compared with 13% of under 65s.

n Barclaycard’s offer on its Hilton Honors Platinum Visa is “ludicrously generous”, yet take-up is bizarrely low, says Thisismoney. All you need to do to “bag its sign-up bonus” – a free weekend night at a hotel in the 5,000-strong Hilton portfolio – is to spend £750 on the credit card in the first three months. The card has no annual fee, and an APR of 18.9% if you don’t pay off your balance within a month.