Marcus by Goldman Sachs has launched a joint savings option for its popular online savings account.
Couples, friends and family members can now share the account, with equal rights to deposit and withdraw cash.
However, just a few days after the announcement, the bank reduced the interest rate from 1.35% to 1.3% AER. At the time of writing, this means it’s no longer the top-rate instant-access account – although it does only miss the top spot by 0.01 percentage points.
So, is it a good idea to pool your savings? And is the Marcus account the best option out there for joint savers?
Here, Which? explains what the new Marcus joint savings account offers, the benefits and pitfalls of joint savings accounts, and what other deals you can find on the market.
What does the Marcus joint savings account offer?
The Marcus by Goldman Sachs joint savings account is essentially the same as the individual account, except that two people can be joint legal owners of the money.
How to open the account
To get a joint account, both new and existing customers will need to open a new joint account with the person they want to share it with, and pay in a £1 minimum initial deposit.
It must be opened and managed online (although you can give some instructions over the phone), and both account holders can transfer cash and close the account.
You can only deposit and withdraw money via a linked account (or two, if you and your joint account holder have separate current accounts).
You can open a joint account with a spouse, partner, friend or relative – you both just need to be over the age of 18, and UK residents for tax purposes.
The account currently pays 1.3% AER. When it launched in time for Valentine’s Day it offered 1.35% AER, but it was reduced just a few days later.
You can pay in up to £250,000, but bear in mind that the Financial Services Compensation Scheme (FSCS) will only cover up to £85,000 per person (so £170,000 if two of you open a joint account) if the bank were to go bust.
When sharing a savings account with someone, you must be comfortable with them seeing a certain amount of personal information about you.
With a joint Marcus account, the second applicant will be shown the first applicant’s name and address in order to make sure it’s the right person.
Once the account is open, you’ll both be able to see the details of the account transactions. However, the other person won’t be able to see any details of any other Marcus accounts you hold.
What if there’s a dispute?
Withdrawals and deposits are unlimited. However, if either owner reports a dispute regarding the joint account, Marcus says it won’t allow any payments in or out of the account until both owners confirm that the dispute is resolved.
While the money in the account will keep earning interest, this won’t be added to the balance while the account is restricted.
Payments may also be stopped if the bank considers it necessary to protect the interest of one of the account holders.
What other joint savings accounts are on the market?
Many providers allow their savings accounts to be opened jointly; however, the terms for doing this may vary, so make sure you double-check what’s required first.
Among the top rates on offer are Virgin Money’s Double-Take E-Saver instant-access account, paying 1.31% AER. However, as the name suggests, you can only make two withdrawals per year.
If you want a joint savings account for a fixed term, you could consider a one-year fix from Bank of London & The Middle East, which pays 1.65% EPR.
As this is a Sharia-compliant account, it offers an Expected Profit Rate (EPR) rather than an annual equivalent rate (AER). The rate is not guaranteed, but we haven’t heard of any instances in the UK where an advertised EPR hasn’t been paid.
For a longer-term joint savings option, Gatehouse Bank’s five-year fixed-term account currently offers the top rate of 2.1% EPR.
- Find out more: Islamic finance and Sharia-compliant savings
Joint current accounts
You could also consider an interest-paying joint current account, but the top rates come with many caveats. Make sure they’re suitable for your circumstances before signing up.
The top accounts at the moment include:
- Santander 123 account: pays 1.5% AER on balances up to £20,000, and you can earn up to £900 in interest – but the rate will drop to 1% AER from 5 May 2020. You can earn 1-3% cashback on bills; £5 monthly fee applies; you must pay in at least £500 a month and pay out two direct debits.
- Nationwide FlexDirect: pays 5% AER on balances up to £2,500 for the first 12 months, 1% AER thereafter; must pay in at least £1,000 a month; can earn up to £375 maximum interest.
- Bank of Scotland Classic Vantage: pays 1% AER on balances under £4,000 and 2% between £4,000 and £5,000; must pay in at least £1,000 a month, stay in credit and pay out two direct debits; can earn up to £360 maximum interest.
These accounts allow each person to hold an individual account as well as a joint account, so two people could potentially earn three accounts’ worth of interest.
- Find out more: how to find the best joint bank account
What are the benefits of a joint savings account?
As we found in our recent podcast episode looking at how couples manage their money, everyone is different. You can listen to it below:
For some people, a joint savings account is an easier way to siphon off cash for a specific purpose – for example a holiday, property deposit, or even to cover the cost of Christmas.
If you have a lot of money to put away, a joint savings account means twice the usual amount will be FSCS-protected, as the scheme covers £85,000 per person. This means you can safely save up to £170,000 jointly.
Joint savings can have benefits for families, too. For example, if you have an elderly parent you can pay for things such as medical or care costs.
Having a shared account with a parent also means you’ll get right of survivorship over the funds when the parent dies.
Parents of children aged over 18 might also find it useful to open a joint account with their offspring to help with university costs.
Bear in mind that either saver can withdraw all of the funds in the account at their discretion, without the co-owner’s consent, so it’s vital that you trust the person you’re opening a joint account with.
- Find out more: how to find the best savings account
Could a joint savings account affect my credit score?
Savings accounts aren’t reported to credit reference agencies, and therefore don’t affect your credit score.
This means that, even if you or the person you open a joint savings account with has a poor credit history, neither person’s credit score will be affected by opening a joint savings account.
This is different from opening a joint current account, which will financially link you with the other account holder on your credit file, potentially affecting your ability to borrow.
But while your credit score isn’t affected by opening a joint savings account, you will be jointly responsible for the cash in the account. This means that if one member of the account makes it go overdrawn, or is involved in debt collection, you will also be responsible.
If this somehow leads to you being in debt yourself, that debt could affect your credit score.
For this reason, it’s still important only to open a joint savings account with someone you trust.
- Find out more: credit reports – all you need to know