Combining accounts

It should make perfect sense. If you can trust your other half with your heart then surely you can trust them with your cash. But while joint accounts are another step towards a caring, sharing life together, they are also open to abuse.

When you fill in the application form for a joint account it will include a mandate giving you both the authority to access the account and the money in it. You can choose to have unrestricted access to everything or you can limit the amounts available for withdrawal by requiring both account holders to sign for larger amounts of money. Bear in mind that cheques and debit card payments will usually only require one signature. Every transaction on the joint account will be available for each of you to see. Research from Abbey National shows that women study joint account statements much more closely than men. If you don't want to reveal your salary or your expensive habits then now is the time to reconsider.

Joint accounts are still very popular in the UK. Nearly half the population have one, with the majority belonging to married couples. But are they right for you and your loved one? Find out the if the advantages outweigh the disadvantages before you decide.

Advantages

The obvious advantage of a joint account is convenience. if you are paying rent or a mortgage and household bills jointly then nothing could be simpler than pooling the cash and paying from one account. You can arrange for one or both salaries to be paid into the account or set up standing orders so that a certain amount is transferred into the joint account each month. Joint accounts can also avoid you having to decide who pays what bill.

Another positive aspect is the chance to avoid charges and earn more interest because your joint account may have more money in it than two separate accounts. Also, if one of you is away from home a lot, it gives the remaining partner more flexibility with household funds.

Disadvantages

Crucially, you will both be individually and jointly responsible for any overdrafts or debt on the joint account. This is generally true even if only one of you puts all the money in the joint account or if only one of you takes all the money out and spends it. The bank will hold you personally responsible for paying back the money even if you did not agree to it or even know about it. Depending on your bank or building society, it may be possible for you arrange that no overdraft or debt can be run up on the account without the signatures of both account holders.

If you fall out of love or are worried that your money is at risk and the account is one where either of you can sign for withdrawals, the bank may allow you change this so that you both have to sign. The bank may decide it is best to freeze the account so that no transactions can be made or so that essential payments for mortgage and bills can be made with the agreement of you both. Normally this will be done for a temporary period until you can both make alternative arrangements but it can be an essential move to prevent the other person from withdrawing all the funds from the account. If you split up with your partner, you should contact your bank regarding the joint account as soon as possible. Both you and your partner will be responsible for any cheques written against the account so you will need to tear up both chequebooks to avoid ongoing withdrawals. If you keep the joint account running after the split, remember that both you and other joint account holder will be responsible for any debts accumulated.

Finally, because your account is in both names, you should each check the state of your credit records with the UK's three credit reference agencies. Depending on whether they are good or poor they could have a positive or negative affect on the other account holder's credit score.

Compromise

With a certain amount of risk involved, it is perhaps not surprising that nearly two thirds of people surveyed by Abbey National say that they do not want a joint account because they like to keep their income to themselves. A quarter would not trust their partner to access the money sensibly and nearly half believe it would lead to arguments. Women are more reluctant than men to merge finances in this way. Nearly half of women without a joint bank account would never consider getting one.

But there is another option. Setting up a joint account for household bills but keeping your individual bank accounts could be a happy compromise.