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Are joint bank accounts a good idea?
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Would you enter into a joint bank account with your partner? More than a third of couples (36%) wouldn't, according to latest research by Santander. So what's the problem? If we can share a bed, why can't we share our cash?
According to the study, the main reason people keep their bank accounts separate is to maintain financial independence. Sarah Morgan and John Bennett from Hertfordshire are one such couple who prefer to keep their cash apart.
Sarah, 34, says: "When we got married, I didn't change my name and I carried on working, so it seemed only natural to keep my own bank account. Times have changed and women are more independent.
"John tends to pay the mortgage and I cover the utility bills and food. If we go on holiday or buy a big-ticket item, we just split the cost. I'm sure it all works out fairly in the end."
Like many women today, Sarah does not conform to the old-fashioned role of stay-at-home wife and mother; and the growing presence of women in the workplace over the last half-century at least partly explains the shift away from joint finances. As Dr Heather Laurie, director of the Institute for Social and Economic Research at Essex University, says: "Society has changed a lot in a generation."
She adds: "Traditionally, many women - especially mothers - did not work, so they had no income and no need for a separate bank account. They were often given 'housekeeping' money by their husbands to cover everyday expenses. But more women now work either full- or part-time. They have their own income and are therefore financially independent."
The rise in the number of co-habiting couples could also explain the reluctance to pool financial resources. Dr Laurie says: "Couples who live together but aren't married are much more likely to keep their finances separate, possibly because they are not always as committed to the relationship as a married couple."
Love is complicated
Then there are our complicated love lives to consider. People are marrying later in life, giving them more time to acquire their own wealth. Many people also marry more than once, or have more than one serious long-term relationship.
Dr Laurie says: "Couples in a second relationship are less likely to have joint finances. It might be some sort of scarring effect. They are perhaps less trusting that the relationship will last, so are mindful of their long-term financial security."
But it's not all about social change. The research found that 28% of people kept a separate bank account to avoid arguments about money. And you can see their point. Why would you want a joint account if your partner is a spendthrift and you are a saver? And who wants to feel guilty if they buy a new pair of shoes with a joint debit card?
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"Marriage is a partnership"
Many couples are, of course, happy to pool their money. They pay their salaries into the joint account, even if they earn different amounts. And any expenditure comes out of the joint account, whether it's the mortgage, a new dress for her, or a present for him.
Kate and Oliver Lewis live in Brighton, have been married for five years and share a joint account. Kate, 36, says: "Oliver always earned more than me, and when our baby was born I stopped working completely. But marriage is a partnership. If you trust and love each other, you share everything, including money. I would have to wonder if there was something wrong with the relationship if my husband wasn't prepared to run our finances jointly."
The 'mix and match' approach
If you don't want to keep separate accounts but you are reluctant to pool all your cash, there is a third way - the 'mix and match' approach. The research found that 76% of people who have a joint account also have their own, separate account. They simply pay a regular amount into a joint account, sometimes adjusted according to their earnings.
Paul and Sophie Williams from Essex each run their own account, plus a joint account. Paul, 40, says: "It makes life much easier because we pay household expenses from the joint account and use our own money for personal shopping. I wouldn't like to have to ask Sophie if I wanted to buy some new clothes or a DVD. And what about presents? How could I buy her a present from our joint account?
"But we are both pretty relaxed about our finances," he added. "If we go out for dinner, for example, we sometimes pay out of the joint account or I sometimes pay out of my account as a treat - if I'm feeling flush!"
A joint account is no different from a standard current account, and you don't have to be married to get one. Co-habiting couples and even friends can open joint accounts, and they can be a convenient and flexible way for two people to run their finances.
When opening such an account, users are both given a debit card and will each be able to withdraw and deposit money without the permission of the other account holder. Any cheque book will be in joint names, but cheques do not require both signatures, unless you make a specific request.
In other words, you can run a joint account just like a sole account, so it's simple to pay household bills and other shared expenses, such as holidays or furniture. Some couples find it easier to budget with a joint account. And if you draw up some ground rules about how the money in the account is spent, you won't have to argue about whose turn it is to pay the mortgage.
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What to remember
But before you rush down to your local bank, you need to think carefully. Do you have similar attitudes to money? If your husband is a profligate spender who has never read a bank statement in his life, do you really want to pool your cash? Or maybe your partner is tight with the purse-strings and will begrudge every penny you spend, even if it's within your means.
You should also be aware that you are liable for any debts in a joint account, even if they were run up by your partner. So, if your wife goes on a shopping spree and the joint account ends up £2,000 in the red, you are both legally responsible for the debt.
Couples also have to take a long, cold look into the future: what happens if you split up? The best option is probably to close the account and divide the money between you. But the bank will need both account holders to agree, usually in writing. You could also change the account into one name only. Again, the bank would usually need the written permission of both parties to do this.
Things can be a bit trickier if the split is acrimonious. You might be able to freeze the account if you think your ex is likely to withdraw the cash, but it depends on the bank. And you will probably both have to agree in order to do this, which might not be easy if there is a difference of opinion between the two of you. Most banks have a dispute procedure, so you should check the terms and conditions closely before taking out any product.
Whatever you do, you must do something to prepare for the worst. If you don't, your former partner could even empty the account or run up a huge overdraft which you could be liable for.
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Don't miss out on the best deals
Only a quarter of people who set up a joint account switch to a new bank, but they might be missing out on a good deal. Current accounts have become more competitive lately, with some paying credit interest of up to 5%. And remember that you might have more money to earn interest on in a joint account rather than one held by a single person.
Santander, for example, pays a credit interest rate of 5% on balances up to £2,500, and the bank is currently offering £100 on top if you switch. You must, however, deposit at least £1,000 a month into the account. Elsewhere, there's the Halifax Reward Current Account, which gives you £5 a month, whether you are in credit or overdrawn, as long as you pay in £1,000 a month.
Gillian Almond, head of current accounts at Santander, says: "When couples decide they want to set up a joint account together, it is really important that they shop around to see what current accounts are available.
"It may seem logical to choose one of your existing banks, but you could pick up some great offers by switching to another bank. Some, including Santander, offer incentives to people who do switch their current account and some accounts pay very competitive rates of interest if the account is in credit."
If you are worried that your bank might go bust, then you can take some comfort from the Financial Services Compensation Scheme. If your bank is authorised by the Financial Services Authority, the scheme guarantees up to £85,000 on deposit. That's per person, so joint account holders can benefit from protection of up to £170,000.
Some of the names used in this article have been changed.
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One big advantage of joint accounts which the article doesn't mention is if one of the partners die, and let's face it it could happen to anyone anytime. The surviving partner could struggle if the partner's money is in a sole account, particularly if they were the breadwinner and had the big money in. With a joint account the surviving partner can carry on operating the account and maybe transfer the funds into an account in their sole name.
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