To common users of banking services, money transfers are money transfers. As in, you don’t consider them complex: just a tool to send and receive funds. But then, you face a plethora of terms like bank transfers, wire transfers, electronic payments, online transfers, and so on. And you start to wonder – “is there a difference between all of these?” and “what should I use?”. Well, let’s figure it out together! In this article, Genome will primarily focus on bank transfers and wire transfers and how they differ and compare wire payments to other transfer options as well. Wire transfer:
We’ve all been in situations where we need to share expenses: with friends, family members, partners, etc. Doesn’t matter if it’s paying bills with your flatmates or saving up with the loved ones for holidays or some large purchases like a car or real estate. Here joint bank accounts come in handy. Join us at Genome today and let’s take a closer look at how they work and what are the risks of opening and managing such an account.
How joint bank accounts work
These are special accounts in the name of 2 and more users. They work like regular current accounts, but, as we’ve just mentioned, they are designed for a few people. It means that all the users of the account have access to the funds deposited in it. They have equal rights when it comes to using an account, withdrawing money, making transfers, and so on.
However, as for the last one, different PSPs have different conditions and rules. For example, some of them require all joint account owners to confirm the transfer if one of them wants to send money. Thus, the range of features and services that will be available once you open a joint bank account depends only on your finance provider.
The pros of a joint account
The main advantage of opening a joint bank account is quite obvious:
Simple money management
Instead of trying to figure out who needs to pay for what, you just open a joint account. You will have access to all transactions and see how another person is spending funds. It’s so much easier to handle payments via a joint bank account compared to making transfers from personal to personal current accounts every time it’s needed. This is especially true for people who are managing finances together for an extended time. Such as couples, relatives, flatmates, and so on.
Sharing funds also goes up to a whole new level. For instance, with the help of a joint account, partners can see how much they are paying for bills and other expenses each month. In addition, they can see how much they can save up to have the necessary sum for an important purchase.
The cons of a joint account
Here are some disadvantages of joint bank accounts for your consideration if you’re thinking about opening one:
- No financial privacy
All your financial operations and money movements are visible to other users of the account. They will know how much, when, and what you’re spending money on.
- Shared credit history
Once you open a joint account with another person, your credit histories will be connected. For example, if your partner has a low credit score, this can also decrease your credit score.
All the fees and debts get shared too, just like the money deposited in the account. With overdrafts, the interests are applied to all the users of a joint bank account. That’s why you can be forced to pay money even though it was not you who took out the overdraft.
- Losing money
Because all owners have the same access to the account and funds deposited, there’s usually little control over who withdraws funds. It means that if another joint account user takes all the money from the account, there are few chances to get them back. It’s a good example of why you only need to open joint accounts with people you trust.
The risks of a joint account
Some of them we’ve mentioned in the previous section. You can lose your money anytime if another account owner withdraws funds. The same goes for overdrafts: even if it’s not you who got overdraft, you will have to pay off your part of the interest. Shared credit history is another risk of having a joint bank account.
Of course, there’s also a legal side to managing a joint account. For instance, if you have one with your partner but now you’re getting divorced, it might not be so easy to receive your money. Similarly, joint bank accounts may complicate tax fillings because you’re sharing money with somebody else. It’s quite challenging to figure out taxes on shared finances.
Is a joint account right for you?
We’ve just explained the pros and cons, as well as the risks of having a joint bank account. But how do you know if you really need one? The answer is simple: you have to be sure that the benefits of the joint account outweigh all the complications that may arise.
Of course, you have to check the offers from different banks beforehand to know what you’re agreeing to when creating a joint account. Such accounts work great for couples in long-term relationships, no matter if you’re married or no. However, if you just want to share bills with flatmates, you do not necessarily need a joint account. If you move out within a year, there will probably be more issues than use from such an account.
How to choose a joint account
Just like with choosing anything else, check what’s there on the market. Most banks do not have monthly fees for having joint bank accounts. Nevertheless, there are quite a few other things that should be considered, such as closing procedures, interest rates, arranged overdrafts, and so on.
Many modern fintech companies offer business accounts services with 2 or more users. If you’re looking into managing your company finances with your business partner/analyst/accountant/etc, it can be a great solution for you.
In Genome, we provide the feature called “My Team” for our business users. It’s an awesome tool for access management and efficient workload distribution between the employees. The main idea here is that different workers have different accesses and roles with the account.
All these roles are redistributed and given by the person who opens a business account with us. Then, if they want to, they can invite other account users and make them Director, Financial Director, Accountant, and Analyst. You can learn more about all these roles and their levels of access in our blog post on this topic. Before joining the account, users need to register in the Genome system and pass business KYC.
Imagine that you own a small company and do not need to download, make screenshots, and send over a transaction history of your business account to the accountant so that they can prepare reports. With Genome’s “My Team” feature, you do not have to give your access details to any of your employees – they have their logins and passwords. This not only boosts the security of your business account, but also simplifies the money management and daily chores of employees that are involved with finances in your company.
How to open a joint account online
Opening a joint bank account is as simple as opening a personal one. Most banks will let you apply for a joint account online by filling in a special form. All the other account owners will have to do the same. Once all the information is approved, you should be able to start using your joint bank account within a few days.
If you’re wondering what you need to open a joint bank account, no worries, you do not need that much at all. Each user should sign a mandate – a document with all conditions and requirements. Among other essential information required are the personal details of all account owners. This can be identity proofs, as well as address proofs.
Some people prefer to do this personally in a bank branch. In such a way, they can talk to one of the bank’s employees and discuss their worries and concerns. Moreover, they can receive a consultation there and make sure if they really need a joint bank account or if there are any other better options to manage their finances.
How to close a joint bank account
This procedure differs with each financial provider. In most cases, one account owner cannot remove others from the account, which levels up your safety if you’re one of such users. But it also means that the only way to end financial relations with other account users is closing your joint account.
In case you disagree with other account owners, you can cancel the mandate you signed up for while opening an account. This will freeze the account until you make up with the account users. Otherwise, the case can be taken to court to decide who will receive the funds from a joint bank account.
If one of the owners of a joint account dies, the money will be distributed equally between the rest of the account users. You cannot have any overdrafts on the joint bank account if you want to close it. What’s more, the closing procedure is not that simple. It’s only possible if all account users agree to do so. The bank will need to know how the funds will be shared between the owners. Then, each one needs to sign up and send over the required documents.
How do joint bank accounts work?
Joint accounts work like regular current accounts but for 2 and more users. Each account owner has access to all funds, withdrawals, and transfers. Even the fees get shared between account users. For instance, if there’s an overdraft in a joint bank account, all owners are responsible for paying it off. Such accounts are very common between different family members, such as parents and children, or spouses.
Are both names on a joint bank account?
Yes, the names of all account owners are on a joint account. You cannot delete your name from the account. The only option here would be to close the account completely.
Can you have a joint bank account if you are not married?
Yes, you do not need to be married or relatives to open a joint account. Some flatmates or business partners also have such accounts to share expenses. Remember that you should create a joint bank account only with people who you trust completely. If one of the account owners withdraws or uses all money deposited in the account, it’s pretty unlikely that you will be able to get it back.
Who owns the money in a joint bank account?
As soon as you open a joint account, every owner has the same access to the funds. In other words, money is owned by all account users to the same extent. None of them has more rights to use or withdraw funds, because they’re all equal. Just like money in the account is available to all account owners, the charges also apply to all of them.