Which (joint/shared) bank account for 3 students paying bills and rent?

BigWill

Hi everyone, I'm new to posting on the forum but have seen some great replies to other peoples' questions so far!


My 2 flatmates and I are 3rd year UCL medical students and have lived in rented accomodation for almost a year.


Our bills have been split 3 ways but they've been paid from the account of one of my flatmates, meaning we pay her by direct debit when her account is debited. This situation is far from ideal and often leaves her out of pocket before we can afford to pay her back, sometimes over a month after she gets billed!


We've discussed getting a single account to have our shared bills come out of but haven't had the time to get it sorted until now (Summer holiday!!! ).


My question is how would you recommend we do this? Is it better one of us gets an account in one name only and we all pay into that or is there an advantage getting a joint account? And in either case, which accounts are best for just paying bills?


Many thanks!

pensioner76

An alternative is to make each person responsible for paying their share direct. We write up the shares when the bill comes in and each person ticks when they paid. This way money is only owed to the utility and not to each other. The payment status is clear so usually less need to chase people up. The downside is no DD discount.

cottager

A 'financial association' would be created in your credit files by applying jointly for and operating a normal bank current a/c, which is not good news for the rest if any of you has bad credit history now or defaults in the future... or if your application is refused.

On the account itself there's also the potential for joint liability for any overdraft and charges, which could cause 'rumblings' between you if the only reason for it is that one/some of you fails to pay in their share of funds promptly. Also none of you individually could close the a/c or remove yourself from it if the need arose -- only if all of you agreed and gave instructions to that effect, which is relevant if there was ever a falling-out for some reason; or even just a change of circumstances and one moved elsewhere for instance.

NOT having a joint account has its drawbacks too, as you've already discovered. But even without the 'association' aspects, a joint account may not necessarily help you. The same DDs will still need to go out regularly and on time, yet you've said it's sometimes a month or more later before the rest of you can afford to pay your share. If you all held a joint a/c it wouldn't be one flatmate out of pocket waiting to be paid back, but the account itself needing cleared funds to cover bills, and possibly going into overdraft/incurring charges if one or more of you hadn't paid enough into it in good time to cover scheduled payments.

An account in one party's sole name wouldn't create a financial association between you, but there's still the point about it needing to be sufficiently funded on time to cover outgoings, or the sole holder could be penalised or disadvantaged by the actions (or lack of) of the others. Really no different to what you do now, except as you say it would be a dedicated bill-paying account only for the outgoings you share.

A better idea might be a savings account; not credit-checked, only ID-checked, so wouldn't have any implications for your credit files. There are a few online savings accounts with outward Faster Payments available through online banking (e.g. Natwest, Tesco, M&S) so you could make 'manual' payments of bills when due, but I don't know of savings accounts where you can set up DDs -- someone may know otherwise. It means someone must be on the ball to make payments promptly instead of relying on DDs to do it for you, and you would run into difficulty if the only payment option is DD.

But here again, if one or two of you are regularly behind paying your share and nothing changes, a savings account won't help you much either -- you can't pay bills out of savings which aren't there.

Joint accounts work if there's openness and total mutual trust. In theory it's a great idea for flatmates, but there are pitfalls and responsibilities.

It crops up frequently on MSE and I know I've seen threads recently where it's mentioned, but here are a few old ones where the general comments hold good:
https://forums.moneysavingexpert.com/discussion/2567065
https://forums.moneysavingexpert.com/discussion/1967491
https://forums.moneysavingexpert.com/discussion/503120
https://forums.moneysavingexpert.com/discussion/3110542

Also these with info on financial association:
http://www.the-credit-expert.co.uk/credit-report/what-is-a-financial-association/
https://www.econsumer.equifax.co.uk/consumer/uk/sitepage.ehtml?forward=gb_elearning_credit43
http://www.thecreditagency.co.uk/credit-report/check-my/financial-disassociation.html

Pensioner76's suggestion is good... but you'd still all have to pay your share promptly so as not to let a flatmate down, as presumably bills will be in the name of only one of you?

opinions4u

Getting a joint account with a "friend" is asking for trouble.

Find another way to manage the money.

ian_h

If your heart is set on a Joint account that you all pay into and where all the Direct Debits and Standing Orders are Collected from, then to avoid a financial association use a "savings account" which offers these facilities.

The Yorkshire Building Society offers a "Cash Transactor" account that is technically a savings product so doesnt create a financial link, it accepts Faster Payments IN and you can gave DD's and SO's coming out.

There is also online Banking so you can manage the account, you also get an ATM card if you want one (but no debit card).