Joint savings accounts are one of the most common types of savings accounts and offer a simple way to manage the money you share with a partner or housemate and are ideal for paying bills, writing cheques and withdrawing cash.
A joint savings account is very similar to a regular savings account. You are required to regularly deposit money into the account and you are paid interest on what save. However, the only difference is that instead of one person putting money into the account, there are two or more people making deposits. This means that decisions and responsibilities on matters relating to the account are shared.
The most common type of people who open joint savings accounts are couples and those people that live in the same property such as housemates. Married couples, civil partners and co-habiting couples often use a joint savings account to manage their savings. It also makes sense that couples that put their income in one pot are able to put their savings together too. In addition, housemates frequently open joint savings accounts too as a way of managing and paying bills.
People who use savings account generally have disposable income and they want to put their funds in a safe place and earn some interest on their savings.
When you apply for a joint savings account, the bank will usually expect you to provide certain information. All potential account holders will be asked to fill in essential information on an application form whether in a branch or online.
The biggest benefit of a joint savings account is that it offers a straightforward way of organizing your savings and finances. You know that if you have to pay your water, gas and electricity bills each month that you can deposit money in to your joint account and enable a smooth payment process.
A joint savings account can prevent couples from arguing about money because they can both make deposits and access their savings.
The worst thing about a joint savings account is the risk involved in sharing the account with someone else. It is unlikely that you will be able to stop other account holders from withdrawing savings. This situation may arise with cash-strapped housemates, which is why it is essential to trust other account holders.
Account holders also give up a bit of privacy when they share their finances with other individuals. Other parties will be able to access information on transactions you make on the account. For this reason, it may be best to deposit money purely for bills that you are sharing and not for your own personal spending.
One of the risks you take on when opening a joint bank account is the fact that disagreements may develop between different account holders. If this happens there is usually a formal process that will help decide how the remaining money in the account is to be split.
Firstly, you can ask your bank to cancel the mandate. This freezes the account so nobody can access or deposit new funds into the account.
The next best thing to do is for the different account holders to try and resolve the issue between them. If you are able to do this then the bank can arrange to divide the funds in the way that you have agreed.
The Financial Services Compensation Scheme offers protection for the money you put in a joint account if the bank or building society goes bankrupt. If the customers have up to £85,000 in their savings account, the scheme will allow them to recover their funds.
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