Should we use a joint account for everything? Or get a joint account only for the bills? How will a joint account affect our credit scores? Is it best to both use the same bank?
I’ve seen a few questions about how couples share finances recently, so I’ve brought them together into one article.
Should we use a joint account for everything?
Don’t rush into this!
Not only are you linking your credit records (see below) but many couples find it harder to manage a budget if there are two people spending from the same account. You could both think there is quite a bit of money in the account and both of you may then spend the same money…
If you have been living together for years and you both feel very comfortable with the other one’s spending patterns and how you jointly budget, then that’s fine.
Some people like the feeling of being a team and handling everything together.
But even here people often prefer to have their own “spending money” in an account which isn’t joint. Then you don’t have to explain to your partner how much you are spending on a hobby or on their Xmas present.
Or get a joint account for the bills?
You can each set up a standing order to pay money into the joint bills account when you get paid. And all the standing orders and direct debits for shared bills (rent, council tax, utilities, insurance etc) are set to come out of the new joint account.
Some couples only do this for the big regular household bill: mortgage or rent, council tax, energy and water, broadband. Others include all “household” bills such as Spotify, insurances, car finance repayments.
Others put all expenditure apart from some personal spending money through the joint account, so it becomes the normal account to use for at the supermarket, for petrol, the kids’ clothes etc. If you are getting child benefit or other benefits, they could also be paid into this joint account directly.
The practicalities of a joint account
Many banks will let you add another person’s name to your existing account. This can feel like the simplest and quickest way to get a joint account, but it has the disadvantage that you no longer have a personal account of your own. If you only want a joint account for bills, not for everything, this doesn’t really work.
You will need to decide when you open a joint account whether one of you can take money out and make payments on their own, or whether you both have to approve everything.
Joint accounts don’t run themselves… at least one of you needs to keep a close eye on that account, as much as you would your own account.
How a joint account affects credit scores
By having a joint account, you get an “association” with your partner added at the credit references agencies: Experian, Equifax and TransUnion.
If you both have great credit scores, or if you already have other joint credit (loan? mortgage?) then this linking of your credit records doesn’t matter.
But if one of you has problems, that will harm the other person’s credit score… and the person with the bad score won’t see any improvement from being linked to someone with a good score.
When you both have poor or both have fair scores, you may not think this is a problem. But perhaps one of you has a score that will improve faster? That will be held back by a link with your partner whose score isn’t improving fast.
So it’s usually best to avoid joint accounts unless you both have a clean credit record.
Will you contribute equally to it?
If you earn much the same the simplest solution is often the best. But what if one of you earns a lot less, is on maternity leave, is a student, has a very variable income…
It’s a good idea to talk this through with your partner to see what feels fair to both of you, and how it may change over time. A lot of couples suddenly faced this problem in 2020 when one person lost their job or was furloughed because of coronavirus.
The three alternatives to joint accounts
If you don’t want a joint account, because it feels too soon or because of credit score worries, but you still want a way to share bills, most couples use some variation on these three approaches.
Split the bills
You decide who pays each bill, for example one of you pays the rent and the other pays the council tax and utility bills.
One of you get a bills account
If this account is just for regular bills that are going to be paid mostly by direct debit or standing order, one of you – usually the one with a better credit rating – sets up a separate account for the regular bills and you both pay into that account when you get paid. Then the rent, council tax etc are all paid from that account.
The other person can’t add a new bill or take money out, but if this is just for the big regular bills, that doesn’t matter.
Managing everyday expenses such as food and petrol
Many couples also want to share most everyday expenses.
If one person has a good credit record, they could get a credit card and the other person could have a second card on the account. The account holder is totally liable for the whole debt, it won’t show on the person’s credit record at all.
But this risks running up debt unless you are both disciplined not to overspend.
A pre-paid debit card is more of a shared approach and doesn’t risk any debt. You can each have a card and you can only spend up to the amount of money that has been paid in. So you both fund it with £150 a month or whatever when you get paid, then either of you can spend it.
This may sound perfect – but look out for the charges on these cards as they can add up to a lot!
Some questions I have been asked
If we have a joint account, does that mean all our debts are joint?
No. Opening a joint account doesn’t change who is liable for a debt. Nor does getting married!
If there is an overdraft on a joint account, you are both liable for the money.
Is it best to both use the same bank?
I’m not sure what the advantage would be of both using the same bank. And for those very rare occasions when one bank has major systems problems, you may be glad that the other person can still get money out from their account with a different bank!
I started this article by saying don’t rush into having a joint account. It’s even more important to avoid a joint account and have an account of your own if you feel your partner is too controlling over money.
Only you know how serious this is. There is a big difference between a partner who just grumbles a bit about what you spend in the pub or on clothes and one who crosses the line into financial abuse. Read How to tell if your partner is a money bully and try to talk to a friend about it or go to your local Citizens Advice to discuss it.