Joint bank accounts: which are best for rates and rewards?

Couple saving money to buy house

Opening a joint current account can be a practical way to handle money with a partner, relatives or housemates, when you have shared financial responsibilities like rent or a mortgage and household bills.

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Most current accounts on offer from banks and building societies can be opened jointly with one or more people. But which are the best bet for your situation?

Best for paying bills

If you want to open a joint account for practical reasons like sharing household bills the Santander 123 Lite Current Account is a good choice.

That's because it pays up to 3% cashback on certain bills paid by direct debit. You can get 1% cashback on water bills, Council Tax and Santander mortgage repayments (if you have one).

There's 2% cashback on gas and electricity bills or Santander home insurance premiums, while the top 3% rate of cashback is paid on communication bills like mobile, home phone, broadband and paid-for TV packages.

The account attracts a £1 monthly fee and in order to earn cashback you will need to deposit £500 a month and have two direct debits set up.

If you're also interested in earning interest at the same time you could go for the Santander 123 Current Account.

This offers the same level of cashback on household bills (providing you deposit £500 a month and have two direct debits set up) as the Santander 123 Lite Current Account but also offers 1.5% interest on balances up to £20,000.

The extra benefits on the Santander 123 Current Account mean you will have to hand over a beefier £5 monthly fee, so you will need to weigh up if it is worth paying more for.

Alternatively there's the NatWest Reward Account, which costs £2 a month.

It lets you earn 2% cashback on seven types of household bills, including Council Tax.

Best for cash rewards

If the sound of cashback is appealing but you won't necessarily be paying eligible bills from the joint account, you can still enjoy a cash reward on some accounts.

With the TSB Classic Plus Account you can earn £5 cashback every month just for having two active direct debits and an additional £5 in cashback if you spend on your debit card at least 20 times in a month, until 30 June 2018.

The Co-operative Bank is offering those that have its Current Account and sign up to the Everyday Rewards programme the chance to earn £5.50 a month or £66 a year.

You'll get a cash reward of £4 a month plus the chance to earn 5p on every debit card transaction you make in a month up to £1.50.

To be eligible you will need to deposit £800 a month into the account, have four active direct debits set up, log into online or mobile banking at least once during the month and stay opted in for paperless statements.

Alternatively the Halifax Reward Current Account will pay £3 into your joint account each month, giving you £36 in a year as long as you pay in at least £750 a month, have two direct debits set up and stay in credit.

Best for in-credit interest

If you don't plan to constantly spend what's in your joint account you should take advantage of a current account that pays a decent level of credit interest.

The Nationwide FlexDirect current account will pay 5% on balances up to £2,500 for the first 12 months. But you will only get this rate if £1,000 is deposited into the account each month.

The Tesco Bank Current Account will pay 3% on balances up to £3,000 until 1 April 2019. However, you must pay in at least £750 a month and have at least three direct debits set up.

Alternatively, there's the TSB Classic Plus Account which pays 3% on balances up to £1,500. Unlike the Nationwide account this rate won't fall away after 12 months plus you only need to deposit £500 each month and opt for online correspondence.

With this account you can also earn £5 cashback every month just for having two active direct debits and an additional £5 in cashback if you spend on your debit card at least 20 times in a month, until 30 June 2018.

So you could potentially earn £45 in interest and £120 in cashback, giving you an extra £165 in a year!

For larger balances the Santander 123 Current Account is best. This account will pay 1.5% on balances up to £20,000.

Couples who really want to maximise the credit interest benefits should consider opening a sole account each and a joint account, which means you can earn interest on larger balances.

With the Santander 123 Current Account, for example you could potentially have £60,000 spread across the three accounts that will earn the 1.5% rate, which means you could eatn £900 a year in credit interest alone.

Best for switching rewards

Most people that use a joint account will also have a separate sole account which their salary is paid into.

But if you're in a situation where you want to make a joint account your main account, perhaps with someone you trust like a partner, you can get some great offers for switching, which you can share.

Switch to the M&S Bank Account and you'll score £185 in M&S gift cards.

You'll get a £125 gift card when you switch using the Current Account Switching Service and up to an additional £60 when you stay for 12 months (£5 a month). The only conditions are that you pay in a minimum of £1,000 and have two active direct debits.

With the First Direct 1st Account you can get £100 for making it your main bank. In order to qualify for the bonus one or both will need to switch their account using the Easy Switch service, set up at least two direct debits and pay in at least £1,000 a month to avoid the £10 fee.

Halifax is offering a £125 bonus to switchers (falling to £75 on 31 July). You need to switch via its switching service to qualify, move all active credits and direct debits across and close your old bank account.

With these switching offers it's important to remember that the bonus offer is only paid per account not per person and some will limit the offer to completely new customers, so if you've claimed the reward as a sole customer before it might not apply to your joint account.

Joint account downsides

I'm a big fan of joint accounts as they're handy tools to manage shared financial responsibilities, but they also carry risks.

Here are the main pitfalls to consider before taking the plunge with a partner, relative or housemate:

  • A joint account links people financially and means they can impact your credit rating. So another account holder with a low credit score may damage yours;
  • If the account becomes overdrawn by one person, each account holder is liable for repaying the debt;
  • You lose privacy on a joint account as all transactions will be able to be viewed by all account holders;
  • If one account holder takes money from the account without your knowledge, you won't be able to get it back.

Some joint accounts can be set up as both-to-sign, where all account holders have to give permission every time money is taken out of the bank account, or either-to-sign, which allows any account holder to withdraw money.

The bank or building society you open a joint account with should set out clearly who can take money from the account, how overdrafts will be handled and how to handle disagreements or the end of a relationship between joint account holders.

This agreement is called a mandate, which all account holders will have to sign.

For more information about joint accounts the British Banker's Association has put together a handy leaflet and the Citizens Advice Bureau has outlined a few things to think about.

10 things your bank doesn't want you to know
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10 things your bank doesn't want you to know
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution. 
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself. 

Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.

Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.

Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.

As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.

If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.

If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.

If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.

The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.

If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.

If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.


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