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Joint Bank Accounts

Are you thinking of opening a joint bank account with your partner or spouse? Compare current deals with Savvy today.

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, updated on July 31st, 2023       

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Compare bank accounts for joint ownership

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Joint bank accounts explained

Signing up for a joint bank account can be an exciting next step in your relationship.  Take a look at some of the issues to consider before opening a shared account and compare the key details and options available for a couple looking to make that next step forward together right here with Savvy today.

What are joint bank accounts and how do they work?

A joint bank account is an account held in the names of two people instead of one.  All parties can withdraw and deposit funds just like a traditional bank account.  They are frequently transaction or everyday accounts, but it’s also possible to open joint savings accounts, term deposits and offset accounts.

Joint accounts in Australia come in two different varieties: ‘both to sign’ or ‘one to sign’.  The difference between these two is that with a ‘one to sign’ account, which is the most common type, either person can carry out transactions without needing the authorisation of the other.  If the account is set up as ‘both to sign,’ this means both parties have to give their authorisation for a fund withdrawal to take place.  The names hark back to the days before online banking when withdrawals and payments were made using cheques.  In the case of ‘both to sign’, each cheque would require two signatures before it could be cashed. 

What should we consider before opening a joint bank account?

Before opening a joint bank account, the two parties must discuss rules for operating the account.  Both people need to agree and understand how the joint account is to be used, and what the limitations are.  Here’s a checklist of some of the main issues that should be agreed to before the joint account is opened:

  1. Discuss whether to maintain separate individual accounts in addition to the joint account. If personal accounts are still to be maintained, what expenses will these personal accounts be used for?
  2. Talk about the items the joint account will be used for. For example, is the account only to be used to pay for joint items such as the rent or mortgage or utility bills?  If so, what expenses are considered to be joint?  It can be useful to draw up a list of bills and expenses that both agree will be paid using the joint account.
  3. Decide how much each person will contribute to the joint account. If there’s a disparity between how much each account-holder earns, decide if both will contribute the same dollar amount or a similar percentage of their income, or will both parties have their entire income paid into the joint account?
  4. Agree about what ‘luxuries’ joint account money can and can’t be spent on (without asking the other person’s opinion). For example, this could avoid a situation where one person buys a ‘bargain’ set of knives for $600, but the other person doesn’t think they were a necessary purchase.
  5. Establish your individual ‘spending thresholds’ and communicate this limit clearly to your partner. You may be surprised how much this limit varies between people.  For example, one person may say they’d like to be consulted if the other party intends to spend more than $100 from the joint account.  Another person may believe that consultation should take place if a purchase over $1,000 is made. Knowing and respecting each other’s spending thresholds is key to making a joint account work successfully.
  6. Decide in advance how the account will be divided and closed in the event of a split-up or if the combined account doesn’t appear to be working.  By agreeing in advance on how the account will be treated in the event of a separation, you can simplify a potentially complicated process down the track.

Do both people get a debit card to access the joint account?

This varies between couples.  Some prefer to have just one debit card and share the card between two wallets.  However, it’s more common for the bank, credit union or building society to issue two cards, one for each account-holder.  Both debit cards will enable the user to have access to the joint account to make payments, withdraw cash at ATMs and purchase items online.  There aren’t usually any additional fees to provide two debit cards instead of one.

When can joint bank accounts be most useful?

There are numerous situations where a joint account makes perfect sense, and for this reason, there are many different types of bank accounts for almost every situation.  Some commonly seen scenarios include:

  • Two people in a relationship sharing household expenses
  • Two or more people operating a small business together
  • Parents wanting a joint bank account with their children
  • Teenagers or students who intend to travel overseas together and wish to minimise account fees
  • Separated parents maintaining a joint account to pay for the needs of their shared-custody children
  • Adult siblings taking care of elderly parents together, as having a joint account with parents could enable either sibling to do the shopping and run errands for their parents without the need for cash

Types of bank account

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What are some of the pros and cons of joint bank accounts?

PROS

Make life easier

Having a joint account can make it easier to pay joint expenses such as rent or mortgage payments or to pay for the weekly supermarket shopping.  Who pays for dinner need never again be an issue!

Embrace financial transparency

With a joint bank account, both partners can see exactly how each dollar is spent and where the money is going, so there’s total financial transparency in the relationship.

Meet bonus interest requirements more easily

Some savings accounts require a minimum monthly deposit to receive generous bonus interest.  If this limit is quite high, such as a minimum deposit of $2,000 a month, it’ll be easier to reach this target if two people are contributing to the savings account.

Reduce account fees

Having a joint account can prove to be cheaper than having two separate accounts, as only one set of fees needs to be paid.  If an account fee is $5 per month, that’s a saving of $60 a year in account fees alone.

CONS

Difficult if you separate

If your relationship suddenly heads south, it may be difficult to agree on how to divide the joint account funds between the account-holders.  This can lead to arguments which can spill over into other areas of your lives.

Increased risk

One partner spending irresponsibly can end up negatively affecting both partners’ credit records, even if only one half of the couple is responsible for the loss.

Financial tension

A disparity in earning capabilities or spending expectations can result in financial tensions.  If spending limits aren’t agreed upon in advance, this can be detrimental to a healthy relationship. 

No happy surprises

As each partner can see exactly what the other has spent money on, this can mean there’s no fun surprises as the cost of birthday or Christmas presents is revealed (if separate bank accounts are not retained in addition to the joint one.)

More of your frequently asked questions about joint bank accounts

Can more than two people open a joint bank account?

Yes – some financial institutions allow more than two people to hold a joint account, although two people sharing an account is the most common option.  In business situations, it’s sometimes necessary for all company directors to be signatories to a business bank account or for a director to co-sign any payments the company secretary wishes to make out of the company joint bank account.

What does a joint account ‘in trust for’ mean?

Sometimes a joint account is used to hold money on behalf of a third party who is unable to manage the funds themselves.  This may be because the third party is a young child or is otherwise incapable of making financial decisions for themselves.  In such a case, a trustee may be nominated to administer the account on behalf of the third party, for the sole benefit of the third party.  For example, a godparent may open a joint bank account for their newborn godchild and appoint the child’s parents as trustees, so any money in that account is held in trust for the child until they reach an age where they’re able to handle their finances themselves.

Can either party close a joint account without the others' permission?

Yes – if the account was set up on a ‘one or either to sign basis,' either person can make withdrawals and close the account without the permission of the second party.  It’s important to discuss this with your joint account-holder to ensure your shared funds are safe.  Savvy can help you find the best joint bank account by comparing fees, charges and interest rates and presenting you with this information in an easy-to-read format.

At what age can a child remove their parent from a joint account?

This will depend on the financial institution and the conditions of the joint account with the child.  At the age of 12, a child can legally open their own bank account in Australia.  They can be issued with a debit card with their parent’s permission at the age of 12 and get a card themselves without parental permission at age 14.  Some banks allow the young person to remove parental controls at the age of 14, while others allow progressively more control to the child from age 12 onwards.

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