5 things to consider before opening a joint account

Opening a joint account with someone else can be a big step. While it may not have the romance of getting down on one knee or the monumental feeling of getting the keys to your first home together, it’s still a significant moment. So it’s wise to do your research beforehand!

Here are 5 things to discuss before opening a joint account.

1. Agree on what you’ll use it for

It’s a good idea to be clear on what you plan to use the account for. If you’re a couple, it could be that you want to use it to cover the household bills. Or maybe you’re at the stage where you want to combine finances entirely.

Whatever you want to use the account for, it’s best to talk through the details beforehand. For most couples in the UK, a joint account is for shared household expenses like rent or utilities. Work out how much each of you is willing to deposit each month and put some ground rules in place about how this can be spent. You don’t want to find that your partner has used the money for your meal out together when it should have been covering your joint council tax.

2. Understand how you both approach spending

It probably feels unromantic to talk to your partner about their approach to money. However, if you’re at the stage of opening a joint account, it’s best to know if you’re with a “save for the future” or “spend it in the moment” kind of person.

Understanding how each of you approaches money will hopefully mean that you can use your joint account more effectively.

3. Pick an account with the right features

Once you’ve hashed through what you’re using the account for – and headed off any potential money arguments along the way – now’s the fun part of choosing which joint account to go for.

Do you both want spending notifications so you can see how much is going in and out? Do you want to be able to spend abroad fee-free? There are lots of joint accounts available, so it’s worth comparing features before you decide which one you want.

4. Understand the effect on your credit score

This one may catch you out and is perhaps the most important. Not all couples realise that by taking out a joint account, you’ll be creating a “financial association” on your credit report. Meaning if you apply for credit in the future, the lender may look at your partner’s credit history as well as yours.

Unfortunately, if one of you has a poor credit history, this could impact whether or not either of you can borrow money in the future.

5. Agree on a plan if you needed to close the account

It’s not nice to think about, but it’s worth researching what happens if your relationship ends and you want to close the joint account. It’s important to realise that either one of you can withdraw funds from the account at any time. So if there is a breakdown of communication or you don’t trust the other person, it could be an idea to inform your bank. The bank will then typically place a freeze on the account until you can both be present and decide together what to do with the money.

Typically you can’t remove an account holder without their consent. Therefore, to close a joint account, you’ll most likely both have to agree and provide written consent.

About the author

Kate Steere is an editor at Finder.com, specialising in banking and fintech. She has previously written for The Motley Fool UK and Fitch Solutions, where she covered a wide range of personal finance topics and kept a close eye on market trends. Kate is regularly quoted in the national media about banking, fintech and mortgages.

This article originally appeared on finder.com/uk and was syndicated by MediaFeed.org.