If you’re living with your long-term partner or a friend, it’s likely that your finances have become entwined over the years and you no longer keep strict track of who owes who what.
Perhaps it’s time to mix your finances officially with a joint bank account. There are many benefits to doing this. We have a look at reasons, a working example, and the pros and cons.
Tip: Before officially mixing your finances with a loved one, make sure you’re not struggling with debt.
When should you open a joint bank account?
According to Eloise Boezak, head of customer experience at African Bank, opening a joint bank account is a good idea if you have shared goals.
Whether you are saving for a wedding or a holiday, Boezak points out, it’s important that you are on the same page and that you share the same priorities.
“It’s also very important to compare what's on offer. Almost all banks allow you to hold accounts jointly. It's worth checking out the different account options,” says Boezak.
Example of how a joint bank account works
Boezak says that African Bank’s MyWORLD account is a good example of a joint bank account.
“When a primary account holder opens a MyWORLD bank account, they get access to a primary account and two types of 'Pockets' — a Power Pocket and a Savings Pocket.
“The Power Pocket offers the user full transactional capability. It comes with its own account number, debit card, and PIN, and earns interest per annum on positive balances.
“The Savings Pocket allows the primary account holder to save at a slightly higher interest rate per annum on any positive balance, while enjoying immediate access to their funds.”
Boezak says that a Pocket User, who can be anyone that the primary account holder designates, can be added to a Power Pocket. The user status allows the person full access to the Pocket.
“The primary account holder can also decide who is responsible for the pay-as-you-use transaction fees on each Pocket, and up to 10 members can be added to each Power Pocket,” says Boezak.
Members, she explains, do not have the same rights as a user, but they can keep a close eye on what’s happening in the Pocket. A member can also deposit money into a Power Pocket, but they cannot transfer money out.
READ MORE: What kind of bank account should you open?
What are the pros and cons of joint bank accounts?
A joint bank account can be of great value to pairings, such as friends, family, and partners. However, before committing to mixing your finances, it’s good to take note of the pros and cons.
The advantages of having a joint bank account include:
- Reduced administrative hassle and saving on fees
- Convenience – everything is in one place
- It’s easier to pay joint expenses like utility bills or rent
- You can track your progress toward a shared goal, together
The downsides of having a joint bank account include:
- Potential disagreements on spending habits
- A loss of independence and autonomy – with separate accounts you do not have to justify every expenditure
- It could be harder to buy surprise gifts without your partner knowing
“Whatever you decide, the most important thing is being on the same page as your partner from the very start,” says Boezak.
Don’t hold loved ones down with your debt. Start debt consolidation today to sort it out.