There often comes a point in an Australian’s life when they decide it’s time to open a joint account with a significant other. This could be a partner, a spouse, even just a friend. It can be as a sign of trust or just for convenience, but if you’re making such an important decision with whomever for whatever reason, it can be tough to know if it’s the right choice for your situation.
To help you figure it out, here are just a few questions you should be asking yourself before opening a joint account.
Why do we need it?
A joint account can be useful in a number of ways for a number of different people. A couple, for example, could use it to keep an eye on their family’s finances in order to stop themselves from falling into issues: Something that a Relationships Australia survey showed created stress and tension in the relationship and can drive people apart.
A pair of roommates, on the other hand, may consider a joint account as a communal fund into which to put the various expenses, while still having separate accounts. This can be much easier than having every person transfer money from their own bank accounts. Joint accounts have a lot to do with trust, but also come with a lot of practical benefits as well, and not just for married couples.
What kind of account should you use?
There are two different kinds of joint accounts: both to sign or either to sign. The former makes transactions possible only when both parties agree to it, while either to sign allows either person involved to spend or extract money from the account.
If you are using the joint account as a communal fund for your family with a person that you trust, either to sign is likely more practical: You don’t want your partner to have to ring you up every time they want to go grocery shopping. On the other hand, a both to sign method might be more suitable if you are in a more casual scenario, such as using the joint account to pay your bills in a flat. In this case, it might be wiser to have that added security.
What happens when/if it needs to be closed?
Whether it’s the end of a relationship or switching to a new bank, knowing how to close a joint account is integral to making the right decision. Both parties need to agree to close it, while the ultimate balance needs to be summed to zero – that means all credit cards paid off.
You can imagine how that could become a difficult situation in some scenarios, but you may find that it is worth it for your own money needs. If you’re thinking of opening a joint account, make sure you get in touch with the team at Police Bank and discover your options in transactional accounts today.