One account, two names
Opening a joint account with your partner is a huge
commitment and one of the biggest decisions you will make in
your relationship. Only do it if you completely trust them to
responsibly access the money, in good times and in bad.
Here are some tips to work out whether a joint account is right
Risks of joint accounts
It's not a good idea to open a joint account with someone you
have just met as you are giving them access to your money. Joint
accounts are only suitable for people who trust each other deeply,
like a family member or your long-term partner.
Case study: Costa's girlfriend takes him for a ride
works interstate a lot. He decided to open a joint account with his
girlfriend, Jenny. The joint account meant he wouldn't have to
worry about paying his bills when he was away as she would arrange
it for him.
A few weeks later, Costa checked his account to make sure his
boss had paid him that week. He was shocked to find there was no
money in the account. Costa tried to contact Jenny but she would
not return his calls. He rang his bank and found she had withdrawn
all his money. She could do this as it was a joint account that did
not need his permission for withdrawals.
After this bad experience, Costa got a separate bank account and
decided to set up direct debits for his bills. It would be a long
time before he trusted anyone with his money again.
Be very wary of anyone pressuring you to open a joint account.
People do have money troubles and may see you as a way to help
solve their financial problems.
If you open a joint account which offers credit, and one account
holder racks up a large amount of debt they can't pay back, you
both risk having a bad entry on your credit report. You are also legally
responsible for paying off the debt.
Benefits of joint
People often open a joint account because they pay fewer fees
with one account than two. It can also make joint payments like
mortgage, rent and other bills easier to manage.
Joint accounts work well for people who spend money in a similar
way. Both people should agree how and when they will deposit and
withdraw money, to meet the same goals.
If you are thinking about opening a joint account, ask
- Do I trust the other person completely even if times get
- Do we communicate well about money matters?
- Do we have similar goals for our money and similar spending
- What is our objective in opening a joint account? Is there a
better way to achieve this objective?
A shared account for shared bills
One way to make things more convenient for you and your partner
would be to keep your money in separate accounts but open one
shared account for your shared bills. Discuss with your partner
what bills you will pay with your shared account and how much you
each will contribute.
Types of joint accounts
There are two types of joint accounts.
Both to sign
This type of account only allows transactions to be made when
both parties sign. For example, if you don't agree that your
partner should spend money from the account on a new motorbike,
they wouldn't be able to access the money without your agreement.
If you are worried about security, this may be a good option for
Either to sign
This account allows both parties to transact independently of
each other. This is a less secure option because one person can
withdraw and use the money without the approval or knowledge of the
Case study: Missy's ex-husband empties their bank account
was married for 5 years before she and her husband decided to
separate. They had over $10,000 in a joint account that they used
to pay bills and save for their children's education. A couple of
weeks after the separation, Missy's card was declined in the
supermarket. There was no money left in the account and she
couldn't pay for her groceries.
Missy rang her bank to complain only to find out that her
husband had emptied the joint account. Their account allowed either
to sign, so her husband hadn't done anything illegal by emptying
the account. Missy talked to a lawyer who told her she would have
to fight to get her money back, which could take years.
Additional credit cards on your account
Your credit card provider may offer you the option of having
additional cards for family members. These are not strictly joint
accounts and the primary credit card holder is usually solely
liable for the debt. For more information see secondary credit cards.
Closing a joint account
There is more to closing a joint account than just cutting up
the card. Follow the steps below to close the joint account
- Both owners need to agree - Before you start
closing a joint account, both owners need to agree that the account
should be closed. Agreeing on this will help avoid any delays when
it comes to arranging the closure. If you cannot agree, contact
your bank to advise them of a dispute between the joint account
holders. They may be able to freeze or put a temporary stop on your
account until you are able to resolve this, or they may require
both of you to authorise transactions on the account. Make sure you
have another account to use for your pay and to pay bills.
- Sort out direct debits and credits - Ask your
bank for a 13-month list of any direct credits and direct debits
for your joint account. Contact your employer and anyone else who
regularly puts money into your account, including Centrelink, to
tell them of your new account. Cancel all direct
debits from your joint account and make alternative
arrangements to pay these bills.
- Zero balance - Pay off any overdrawn amount
and work out with your former partner how you will divide the
remaining account balance. Your balance must be zero before you can
close the account.
- Call your bank - Tell them you would like to
close the account. They will need to verify both owners'
identities. Take note of the date and time you called, and the name
of the customer service officer you spoke to.
- Put it in writing - Follow up your call with a
letter confirming you want to close the account. Include your joint
account details, both signatures, and details of your phone call.
Ask for written confirmation that the account has been closed. Keep
a copy of your letter in case there are any issues later.
- Confirmation - You should receive confirmation
from your bank once the joint account has been closed. This could
be a letter or a final statement. If it does not arrive, follow up
with the bank.
Think very carefully before opening a joint
account. Communicate openly with the other person to make sure you
both have the same financial goals. Don't be pressured into opening
a joint account as you could lose your money.
Last updated: 06 May 2016