Joint savings account definition in the banking terms. Managing money together is a big step in any relationship. Trusting your partner, good communication, teamwork and knowing your options can help you find the right account (s) for your relationship.
This is what joint savings account is all about.
Joint savings account definition
This is a type of savings account whereby two people usually couples creates which they can deposit or withdraw cash when the need arises.
You can as well say that a joint savings account is a bank account shared by two or more individuals.
Any individual who is a member of the joint account can withdraw from the account and deposit to it. Usually, joint accounts are shared between close relatives or business partners.
Opening a joint savings account can also help you take advantages of features that may not be available to you as an individual account holder.
That’s because pooling your money may help you meet the minimum balance requirements that qualify you for features like waived maintenance fees, a higher interest rate or rewards.
If you decide to go in this direction, opening a joint savings account is a similar process to opening an individual account.
You and your partner will both need to provide information and identification. You may also be able to add one partner to another’s existing account.
As co-owners, both of you will be able to access and withdraw funds without the other’s permission, and each of you will be able to talk to the bank about the account without the consent of the other.
After you set up your joint savings account, you can decide how to manage and monitor it, including whether you want to sign up for online banking, which of you (or both) will receive account alerts, and if you’ll have shared or individual online banking profiles.
Things to consider before opening a joint account
Some couples feel more comfortable keeping their individual accounts. Keeping your separate accounts as they are grants each person the freedom to control the money he or she earns.
This is helpful if partners have different spending habits; being able to manage money in one’s own way gives each person a stronger feeling of financial ownership.
Separate accounts can also be helpful if you and your partner are in different places financially. For example, if one partner is carrying a lot of debt or has mismanaged money in the past, a degree of separation can provide a sense of security for the other person at least until the debt is paid off.
(Third parties may take funds from a joint account to cover debt owed by one of the individuals.)
The challenge with separate accounts is how to manage shared expenses. Determining who pays for what can be a point of stress for couples.
If you decide to maintain separate accounts, you and your partner should have clarity around this issue, and make sure each of you is comfortable with the arrangement.
The Pros and cons
There are pros and cons of having joint savings account, i’ve explained them below.
1. Combining money in joint accounts make things such as budgeting for regular costs, saving for the future (such as for a wedding, or a holiday) and any other financial commitments much more straightforward.
2. Enable joint accounts owners to make decisions together on how to use the money for their basic need.
1. The security of your joint finances depends largely on the security of your relationship. If you open a joint account, you’re committing to sharing your financial information with your partner, and giving them access to your money.
2. You and your partner will each know how much the other earns, how much money you spend and on what, along with all your other financial habits.
This needn’t bother you, but you may prefer to have some degree of financial privacy in which case you may want to keep your finances separate, or have your own individual bank accounts as well as your joint bank account.
3. If the relationship doesn’t work out and you split up, and it becomes clear that your other half has been keeping secrets from you when it comes to money, your own finances could end up in trouble too.
4. If you decide to go your separate ways, and the joint account is still held in both your names, you’ll have to come to an agreement about what to do with it and you may well decide to shut the account altogether.
How to open a joint bank account
Applying for a joint bank account is no different from opening a single account. As with opening a standard bank account, you’ll need to speak to your bank directly, arrange what documents you’ll need to sign, and what proof of ID you’ll need to open the account.
Alternatively, you could simply add your partner to your existing account.
When you sign up for a joint account, the bank will ask you how you both wish to manage the account, and each of you will be asked to sign a ‘joint account mandate’ that tells the bank how you want to manage your account.
If the relationship ends, you may well decide to close the joint account. If this is the case, you should both contact your bank and arrange for the account to be closed, and any Direct Debits or standing orders to be cancelled or rearranged as you wish.
If you’ve both signed a joint account mandate, bear in mind that if your partner continues to write out cheques, the bank will still be obliged to pay them (as long as they’re backed up by a cheque guarantee card).
Until you tell your bank to cancel the joint mandate, you will still be liable for the payments – which could have an adverse effect on your finances.
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So with this tips, you now know what is joint savings account and its pros and cons especially for people that are not married (boyfriend and girlfriend).