Tying the financial knot with a joint transaction account
May 11, 2011
Australians in serious relationships often choose to combine their finances, opting for joint transaction accounts, savings accounts and credit cards. But what do you do if your relationship sours, putting your finances at risk?
Here, we examine the pros and cons of joint finances and visit some of the top transaction account options on the market to make tying the financial knot with your partner as straightforward as possible.
The advantages of joint accounts
If you're living with your partner and sharing household expenses such as utility bills and groceries, then it often makes sense to open a joint account that you can both contribute to. By allocating a set amount to the joint account (perhaps between 10 and 40 percent of your income each month, an account like this can help to ensure you both pay your fair share.
Because these types of accounts don't earn significant rates of interest, there is little benefit in saving all of your money here. Instead you may wish to keep a separate savings account with a higher interest rate, where you can save the remainder of your salary independent of your partner's finances.
Even if your relationship seems bulletproof, this savings stash may be a good insurance policy.
In the months where there is some cash left over after you pay all of your bills, you can decide together how to best use it. You could treat yourselves or transfer the extra money into a joint savings account or your mortgage.
This extra money saved jointly may come in useful for a holiday for two or for other big purchases, such as a new kitchen.
The obvious disadvantage of sharing funds with a partner is the risk of losing money, should your partner be less diligent with making contributions or if the relationship fails. There's always a chance that the other person could withdraw the money you've contributed without your consent.
However, as mentioned above, transaction accounts don't typically offer high rates of interest, so there is usually little benefit to stashing large amounts of money in this type of joint account.
Another factor to take into consideration when joining accounts, specifically when it comes to credit arrangements is that you are jointly liable with your partner for any borrowing done as a couple. So if one of your actions causes you to default, the resulting black mark will affect the both of you.
The best accounts
If you are opening a joint transaction account just to pay monthly bills and other shared expenses, then you are unlikely to want to pay fees or be worried about high rates of interest. So the best account for your situation may be one that will issue multiple debit cards without fees.
You'll find a suitable account by visiting a financial comparison site, such as RateCity. Here you'll also be able to read our transaction accounts guide, which will help to answer further questions and ensure you're on the path to the healthiest possible financial partnership.
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