The perils and perks of joint bank accounts

The Momentum UK Team 14 February 2014

According to research presented in October 2013 by the University of Iowa, couples who live together are more committed to each other and have stronger relationships if they share a bank account - but is this right for every couple? This Valentine’s Day, we’re taking a look at the pros and cons of sharing your finances with the person you share candlelit dinners with.

Sharing is caring

There may be some clear benefits for couples taking out a joint bank account. If you live together, it can make paying household bills and shared expenses much more straightforward if everything comes out of a joint account, rather than each of you chipping in half every month. If you both pay a set amount of your salaries into a joint account each month, it can help prevent arguments about money because you know exactly how much you’re both contributing.

As well as a joint current account for bills, you may also want to have a joint savings account to help you save for a special holiday, a deposit on a house or just a rainy day. A joint savings account means that you can both pay into it whenever you like, making it easier to build up your savings quickly.

Taking out a loan jointly may also allow you to borrow more than as a single person - provided you both pass the credit checks.

A joint account can help you to feel like you’re both investing in the relationship, and behave more like a unit than two individuals - but it’s important to take the risks into account too.

Love hurts (your wallet)

Of course, every relationship comes with the risk that a person you trust could let you down spectacularly. This risk becomes more serious when that person also has access to your money; if your partner turns out to be unreliable or things go sour between you, a joint account means that they can clean it out without telling you.

A joint current account may not have a huge amount in it, but if you’ve got substantial savings together, it’s worth considering that if your partner simply took everything, it could be impossible to get your share back.

Although taking out a loan jointly may mean that you’re able to borrow more, it also means that you’re both liable for the repayments. If the other person becomes unable or unwilling to make their repayments, you will become liable for the full amount and must keep paying to avoid a mark on your credit file. You should also bear in mind that if you’re financially tied to a person with a bad credit rating, it could affect your ability to borrow too.

Finding the balance

Of course, every couple is different, and there is no need for an “all or nothing” approach when it comes to sharing your finances - many couples choose to set up a joint current account for bills to come out of whilst keeping separate savings and other accounts. If you do decide to open a joint account, it is important to make sure you understand all the implications, and ultimately choose the right approach for your circumstances and relationship.