How to find the best joint bank account
By Michael Somerville
How to find the best joint bank account
Joint banks accounts allow two or more people to manage their money together. Discover the best joint bank accounts for high interest and more in our free guide.
Whether you're renting a flat with mates, combining your finances with your partner or looking to mix your money with your family, a joint bank account can give you a simple and stress-free way to manage your income and outgoings.
Most single bank accounts offer a joint option – but how they work and the benefits they offer vary enormously.
This guide tells you exactly what you need to know about joint bank accounts – from the number of people that can hold, through to how you can use them to double your interest and boost your savings. Jump to:
- What is a joint bank account?
- How many people can open a joint bank account
- How joint bank accounts work
- Online banking and joint bank accounts
- The best joint bank accounts for high interest
- The FSCS and joint bank accounts
- Joint bank accounts and financial associates
- Joint bank accounts and debt
- Disputes and leaving a joint bank account
- What happens when someone dies?
- What happens when someone becomes mentally incapable?
What is a joint bank account?
A joint bank account is a bank account that you share with one or more people. It allows you to share the cost of household bills, mortgage or rent payments with others.
Most banks allow you to convert your single-person account into a joint account or you can keep your own separate current account or and open an additional joint account with another holder.
It’s a simple job to convert a single current account to a joint account – the process is very similar to applying for a single account. You can apply in branch or online and the bank will ask all involved for two forms of ID, such as a driving licence and passport.
The process will normally take three to five working days.
How many people can open a joint bank account?
Most banks will allow two people to open a joint bank account.
But there are some, such as HSBC, which allow an unlimited amount of people to hold a joint account, while Lloyds Bank, TSB and Bank of Scotland allow up to five people to hold an account.
You can see the number of account holders for major banks and building societies in the table below.
How joint bank accounts work
There are two main ways of running a joint bank account.
Either to sign
Either to sign is the most common and flexible joint account. It means that any of the joint bank account holders can authorise a transaction.
Both to sign
Both to sign is a more secure way of managing the account and means that both or all parties will need to sign when transactions are made.
This will normally be agreed by a form called a ‘mandate’, which sets out what each account holder can do individually and collectively when it comes to taking money out and signing for cheques.
Our table below shows you what the options open to you are if you're after added security on your joint bank account.
Online banking and joint bank accounts
All major high street banks have websites and apps which are designed to make managing your money on a joint bank account a simple process.
Once you have set up a joint bank account with someone, you’ll both share a username and password to access the account so you can start using it.
Find out more: How to be safe when banking online
Best joint bank accounts for high interest
One of the major perks on offer from many bank accounts is the ability to earn inflation-busting interest rates on any money you leave in your account. You can currently earn up to 5%, albeit on limited balances.
Opening a joint bank account can allow you to double the interest you earn on your balance, as banks allow you to hold a single current account as well as a joint account.
Our table shows you what you could earn by having both a joint and single bank account that pays high interest.
FSCS protection and joint bank accounts
The Financial Services Compensation Scheme (FSCS) is the safety net that pays compensation to you should your bank or building society go bust.
For single accounts, you get protection up to £85,000. But for joint bank accounts, you get double the protection from the FSCS, so if your bank fails you’ll be covered for £170,000.
Find out more: How your savings are protected under the FSCS
Joint bank accounts and 'financial associates'
Before entering into a joint financial agreement, consider the impact it could have on your credit worthiness.
When you open a joint account that lets you borrow money, a financial link is created between you and any other account holders – known as ‘financial associates’.
While the credit history of a financial associate doesn’t appear in your credit report, prospective lenders may look at their credit report as well as yours when assessing applications. This is because their circumstances could affect your ability to repay.
If your partner has a poor credit history, you should think twice before opening a joint account with them.
Find out more: credit reports and your score explained
Debts and overdraft with joint bank accounts
No matter who pays in and who spends what, you’ll be jointly responsible for any debt. This means that if you go overdrawn, each account holder will be liable for paying back the full balance, and the bank could pursue either of you for this amount.
You may want to consider, therefore, whether or not you need to have an overdraft facility on your joint bank account at all - minimising the risk of either one of you going into the red and both being on the hook for any debt.
If you still want to use an overdraft, it makes sense to have your own bank account, which you can use to borrow.
But bear in mind that not all banks will allow you to set up a joint bank account if you're in your overdraft in your single account. It's worth checking with your bank before you apply.
Find out more: 10 steps to working your way out of debt
Disputes and leaving a joint bank account
What to do in a dispute
It’s never nice, but if there’s a dispute with someone on the account you must act swiftly and cancel the joint account mandate. This will prevent either account hold from making further transactions on the account.
After being notified of a disagreement, many providers will no longer accept instructions from just one account holder – transactions will need to be authorised by all parties, essentially meaning that you have moved from an 'either to sign' account to a 'both to sign'.
A bank may also decide to block the account until an agreement is reached. This means that no funds will be able to enter or leave the account – including standing orders and direct debits – and cards and cheque books will be cancelled.
What to do if you want to close an account
If you split up with your partner and wish to close your joint account, you will both need to contact your bank or building society to arrange this.
You will need let it know how you are going to distribute the money between you, and what should happen to any standing orders or direct debits that are in place on the account.
Remember that details of all financial associations will remain on your credit report unless you tell the credit reference agencies otherwise.
So, if you no longer have a relationship or financial link with the person with whom you held a joint account, contact all three agencies – Callcredit, Equifax and Experian – to issue a 'notice of disassociation'. This means their financial circumstances won’t affect your credit applications in future.
What happens to a joint bank account when someone dies?
When an account holder dies, money held in joint names usually passes automatically to the surviving account holder, which means that they are still able to access the funds, and probate is avoided.
However, the fact that the money in a joint account will legally belong to the surviving account holder if you die could prove problematic if you have left your assets to someone else in your will. If this is likely to be an issue, it’s best not to open a joint account.
Putting money in joint names also reduces the value of your estate, which in turn can reduce an inheritance tax bill.
Find out more: How to reduce your inheritance tax bill
What happens to a joint bank account when someone becomes 'mentally incapable'?
In England and Wales, banks will freeze the account if someone on it becomes ‘mentally incapable’ – meaning a person is no longer able to make their own decisions. This is designed to protect the interests of an account holder who has lost capacity.
So, if for example, a couple have an account together and your partner becomes ‘mentally incapable’ due to dementia or another illness, any other joint account holders no longer have the automatic right to continue to access the account unless Power of Attorney is in place.
Where this isn’t the case, banks and building societies are likely to freeze the account until a third party has been appointed to act on the account holder’s behalf. Account holders with capacity may be allowed to carry out essential transactions in the short term until an application is made to the Court of Protection.
But this is a costly and time-consuming process, so it could be useful to set up power of attorney
In Scotland, under the Adults with Incapacity (Scotland Act) 2000, any other account holder is able to continue operating the account, providing it was set up on an either-to-sign basis. In Northern Ireland, practices vary between banks.
Set up Power of Attorney with Which?
With Which? Wills, you can set up Power of Attorney and get support from our legal experts as you go through the application process.
Visit our Power of Attorney site and see how we can help you get the peace of mind you're looking for.
- Last updated: May 2017
- Updated by: Michael Somerville