How to find the best joint bank account
By Chiara Cavaglieri
How to find the best joint bank account
Joint bank accounts can help you manage your finances, boost savings returns, and double deposit protection, but there are drawbacks. Our guide shows you how to make the most of a joint account – and avoid common pitfalls.
Two thirds (65%) of Which? members have joint accounts, mostly with a spouse or partner, although one in ten shares one with someone else, such as a relative, housemate or friend.
Opening a joint bank account is often a practical decision, for example, it can make paying household bills easier, and ensure a stress-free way to manage shared income and outgoings. But, it also creates a financial link between you and the other owners.
This guide tells you exactly what you need to know about the benefits and the risks – from the best joint accounts for high interest, through to what happens if there's a dispute. Jump to:
- What is a joint bank account?
- Best joint bank accounts for high interest
- Best joint packaged accounts
- Joint bank accounts and debt
- Can a joint bank account affect your credit rating?
- Disputes and closing a joint bank account
- Joint bank accounts and 'mental incapacity'
- Joint bank accounts and income tax
- What happens when someone dies?
A joint bank account is one that you share with one or more people.
It doesn't necessarily have to be your partner or spouse – friends, housemates and business partners might also want to share an account to make managing finances easier.
You can usually add someone to an existing single account to convert it into a joint account – you might both be asked to visit your local branch, and a standalone credit search will need to be carried out on the new party.
If you want to open an additional joint account, some banks will let you do this online as well as in-branch. Either way, you'll need to provide income and employment details, as well proof of your identity and address.
While some banks will only let two people open a joint account, others have no limit, as you can see from the table below.
Each joint-account holder must sign a document called a mandate which sets out how the account will be set-up:
- Most joint accounts are operated on an ‘either-to-sign’ basis where each account holder can give payment and withdrawal instructions independently.
- A few banks allow you to run the account on a ‘both-to-sign’ basis where each account holder must authorise transactions.
Both-to-sign accounts can be useful for small businesses and charities, but they are impractical for most people because each account holder must sign every cheque and give permission for withdrawals (either in-branch or by both going through security over the phone).
Sharing a bank account can be strategic, giving you the opportunity to boost savings returns, double deposit protection and share benefits on a packaged account – as we explain later in this guide. It can even ensure a simpler process when a spouse dies. However, there are risks:
- All parties are ‘jointly and severally’ liable for any debts, no matter how the account is operated and regardless of who spends the money.
- Joint accounts create a financial link between you and the other owners, so prospective lenders may look at their credit reports as well as yours when assessing applications.
Most of the big banks let you operate joint accounts online and via mobile banking apps, assuming it's set up on an either-to-sign basis (if both-to-sign, account holders must typically transact together in branch and therefore not through online or mobile banking).
Once you've set up a joint bank account with someone, you’ll both be given individual usernames and passwords to access the account.
Find out more: How to be safe when banking online
The Financial Services Compensation Scheme (FSCS) is the safety net that pays compensation to you should your bank or building society go bust.
Accounts held in joint names benefit from double the protection in the event of a bank going bust – because FSCS assumes each account holder holds an equal share.
This can be useful for couples because a two-person joint account would be covered up to £170,000 in total (£85,000 per person), assuming neither party had any other savings with that provider.
However, if you have a joint account with an elderly parent, half of the money is still 'credited' to you for FSCS purposes, so make sure this doesn’t mean your total savings with that bank (from your other accounts) exceeds the upper compensation limit.
Things get even trickier when banks operate under the same licence. For example, if you had a joint account with First Direct and a sole account with its parent bank HSBC, you would only be entitled to claim compensation of up to £85,000 across the two if it collapsed (M&S Bank is also owned by HSBC but has its own banking licence and therefore its own FSCS limit).
Use our FSCS-protection tool to check if your bank shares its savings protection limit.
Joint bank accounts at a glance
The table below shows you which banks and building societies let you set up a joint account as both-to-sign (where all account holders must authorise transactions) as well as either-to-sign (where any account holder can authorise transactions).
We also asked them how many people can be added to a joint account, and whether they let existing customers convert a sole account into a joint account.
|JOINT BANK ACCOUNTS|
|Provider||Either-to-sign||Both-to-sign||Max no of account holders||Convert sole account|
|Bank of Scotland||Yes||No||2||Yes|
Max 2 accounts for Barclays accounts with a tech/travel pack add-on
|Clydesdale/Yorkshire Bank||Yes||Yes||No max||No|
|Post Office Money||Yes||Yes||No max||No|
RBS and NatWest packaged accounts may limit cover at an account level, not an individual level
Joint accounts can be a neat way to make the most of inflation-busting interest rates.
Banks tend to let you hold just one interest-paying current account in your name alone, but you can open an additional account in joint names.
We crunched the numbers to identify the most rewarding accounts for a couple:
|BOOSTING JOINT BANK ACCOUNT INTEREST|
|Provider||Interest rate||Cashback||Max accounts between two||Max interest between two||Customer score|
|Santander 123||1.5% up to £20,000||1-3% on bills||3||£720||67%|
Must pay in £500 per month and pay out two direct debits; £720 interest after £5 monthly fee per account.
|Bank of Scotland Classic Vantage||2% up to £5,000||n/a||6||£600||66%|
Must pay in £1,000 per month and pay out two direct debits; three sole accounts allowed per person.
|Nationwide Flexdirect||5% up to £2,500||n/a||3||£375||80%|
Must pay in £1,000 per month; interest rate falls to 1% after 12 months.
|Club Lloyds||2% up to £5,000||n/a||3||£300||64%|
Must pay in £1,500 per month (or £3 fee applies) and pay out two direct debits; three sole accounts allowed per person.
|Tesco Bank||3% up to £3,000||n/a||3||£270||70%|
Must pay in £750 per month and pay out three direct debits; interest rate guaranteed at 3% on up to £3,000 until April 2019.
|TSB Classic Plus||3% up to £1,500||Up to £10 a month||3||£135||69%|
Must pay in £500 per month; earn £5 monthly cashback if you pay out two direct debits and another £5 if you make 20 debit card payments (offer ends 31 Dec 2018 for accounts opened on/after 8 Jan 2018).
Unlike interest-paying accounts, there’s little to be gained by opening multiple cashback current accounts, as banks tend to restrict benefits., for example, Barclays customers can only hold one Rewards Wallet each.
However, a joint account is a good way of getting more value from a packaged account as you’ll both be covered, but will pay just the same monthly fee between you.
Not all packaged accounts offer value for money. But our analysis of the insurance policies offered by these accounts places Nationwide Flexplus (£13 a month) at the top, with a score of 80%. This account has the added sweetener of 3% interest on balances up to £2,500.
Find out more: Best and worst value packaged accounts
No matter who pays in and who spends what, each account holder is jointly responsible for any debt.
If you've agreed to an either-to-sign joint account, anyone can increase or decrease an overdraft without the permission of the other.
The bank could pursue any account holder for an overdrawn balance, even if they were unaware of it.
Find out more: 10 steps to working your way out of debt
Yes, joint accounts create a financial link between you and any other account holders – known as ‘financial associates' – meaning prospective lenders may look at their credit report as well as yours when assessing applications.
If you share a bank account with someone who has a poor credit history it could make it more difficult for you to get credit, even in your own name.
Find out more: Credit reports and your score explained
What to do in a dispute
It’s never nice, but if there’s a dispute you must tell your bank immediately.
After being notified of a disagreement, providers will register the dispute and either freeze the account or switch it to 'both-to-sign' so that it no longer accepts instructions from just one account holder.
This means debit cards and cheque books are blocked, and access to online or telephone banking is suspended until the dispute is resolved, or you both agree to close the account.
In some cases, direct debits and standing orders are automatically cancelled, so you may be advised to open a new sole account to cover essential bills.
What to do if you want to close an account
Some providers will let one person close a joint account, as long as there isn't a dispute registered. But otherwise, you'll both need to sign and send an account closure form or visit a branch together.
You won’t be able to close an account until any overdraft has been paid off.
Your bank or building society will also need to know how the money will be distributed between you, and what should happen to any standing orders or direct debits.
Remember that details of all financial associations will remain on your credit report unless you tell the credit reference agencies otherwise.
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.
Providers in England and Wales may freeze a joint account when one person loses mental capacity, unless a power of attorney is already in place to make decisions on their behalf.
This is designed to protect the vulnerable, but it can take several months and a lot of money for a deputy to be appointed by the Court of Protection.
This would involve temporarily blocking debit cards, withdrawals, online banking and even direct debits – only Clydesdale and Yorkshire Banks, Co-op Bank, First Direct, Nationwide, Post Office, Santander, TSB and Virgin Money told Which? the account would remain in full service for the other account holders.
In Scotland, banks must automatically allow the other account holders to carry on using the account under the Incapacity Scotland Act 2000, 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.
The introduction of the personal savings allowance (PSA) in April 2016 means that annual interest from bank and savings accounts is now tax-free up to £500 for higher-rate taxpayers and £1,000 for basic-rate taxpayers.
Where two joint account holders are in different tax brackets, HMRC told us that half of the interest earned is attributed to each account holder, and then set against their individual PSA.
For example, if the account earned £500 in interest, the basic-rate taxpayer’s remaining tax-free allowance would be £750, while the higher-rate taxpayer’s allowance would drop to £250.
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.
Under Scottish law, a deceased’s share doesn’t pass automatically by survivorship to the remaining owner, but the bank may allow them to continue to operate it.
After receiving the death certificate, the bank can transfer the account into the surviving party’s sole name, although any existing overdraft facilities may be reviewed.
The tax implications can be less straightforward:
- If the account is held by spouses or civil partners, the money is usually exempt from inheritance tax (IHT);
- For anyone else e.g. unmarried partners or other relations, HMRC will want to know how much money was deposited and withdrawn by each owner, and any IHT due must be paid by the beneficiary.
For example, if a son or daughter operates a joint account on behalf of an elderly parent, and never contributed to the account, all of the money will be treated as part of the deceased’s estate.
Find out more: How to reduce your inheritance tax bill
- Last updated: January 2018
- Updated by: Chiara Cavaglieri