A question about joint account v personal account

fimack3

Hi everyone,

I'd be really grateful for some advice, if anyone has any thoughts?

My husband and I are trying to get a handle on our finances. He has debt that he's been struggling with privately (paying min balance on high interest c cards). I also have some debt but am managing it on 0% cards and overpaying. I have a regular income which is about twice my husbands. His income is sporadic (self employed). We have personal accounts and a joint account already (since 2005).

I would like us to have both our pay go to the joint account, then to manage all debt and household spending from there. I could get a loan for his debt with a reasonable interest rate (compared with his current 18.5%). We would then each get an equal amount of spending money each month transfered to our respective personal accounts.

My husband wants to stick with his pay going into his personal account because he believes his credit rating will suffer. I feel the only way forward is to work as a team and pool all resources and manage all spending from the joint a/c.

Does he have a point, or will his being on the joint account and money going in there safeguard his credit rating?

Sorry for the length of the post

Thank you so much

happy_bunny_2

The fact you have a joint account means that you are financially linked.

So if he applies for a loan, most lenders will also search your file also, and vice versa. Its irrelevent where his pay goes, as its the account that links you.

Is that the only financial product that links you?

You can close it and both of you file a notice of disassociation with the 3 CRAs and then you will no longer be financially linked.

HTH

fimack3

Thank you very much, Happy Bunny - that's helpful.
We have a mortgage that comes from our joint account so are linked through that.

He feels that his credit rating will suffer if his pay doesn't go into his personal account. I think the only way we can sort ourselves out is to pool all resources, so want both our pay to come into the joint account.

DVardysShadow

fimack3 wrote: »

... My husband and I are trying to get a handle on our finances. He has debt that he's been struggling with privately (paying min balance on high interest c cards). ... I would like us to have both our pay go to the joint account, then to manage all debt and household spending from there. I could get a loan for his debt with a reasonable interest rate (compared with his current 18.5%). We would then each get an equal amount of spending money each month transfered to our respective personal accounts.

My husband wants to stick with his pay going into his personal account because he believes his credit rating will suffer. I feel the only way forward is to work as a team and pool all resources and manage all spending from the joint a/c.

Does he have a point, or will his being on the joint account and money going in there safeguard his credit rating?

Husband's credit rating depends mainly on whether he is paying minimums in full and on time and to a lesser extent on his overall level of borrowing. To me, as long as he is meeting the minimums on time, your approach seems to be excessively controlling.

In general, this forum advises against taking out loans to pay off cards, because you can't eliminate debt with more debt. And because repayment of loans is a much harder treadmill than repaying cards.

If your income is secure and you won't expect your husband to repay loans on a tighter schedule than his current cards - and you can trust him not to use the slack to take on more debt - then taking on a loan might be away forward. But I would suggest that you don't take on more than 25% of his card debt - you must leave him generally responsible for his own debt. Otherwise, the results will be counterproductive.

happy_bunny wrote: »

The fact you have a joint account means that you are financially linked.

So if he applies for a loan, most lenders will also search your file also, and vice versa. Its irrelevent where his pay goes, as its the account that links you.

Is that the only financial product that links you?

You can close it and both of you file a notice of disassociation with the 3 CRAs and then you will no longer be financially linked.

HTH

While the above is true, reading between the lines, it looks like minimum payments are being met, so it seems to me that there is currently no reason to file notice of dissociation.

fimack3

Thank you, DVardysShadow

No, I don't want to take out a notice of dissociation - I want us to manage the debt together.

He is managing minimum card payments, but because he is paying nearly 20% interest it is going to take him a very long time to repay his 13k debt.

On the other hand, I can get good interest rates because I have a stable income. So I want to pool our income by both paying into the joint account, taking a loan to pay his 13k debt off and then repaying that from our joint account.

It seems like you don't think this is a good idea?
I guess I worry about the massive interest rates on the cards and paying the minimum when if the debt was in my name we could be getting a much better deal. But the only way I am willing to do that is if we both pay into the joint account so that we are working together.

Gordon_Hose

It's not a good idea because you're managing debt with debt. Consolidation loans are rarely a good idea.

Why not work out what you would pay on a £13k loan then pay that amount off the existing debts rather than borrow more?

Pooling your money is a good idea. His credit rating won't suffer because of it. Provided he doesn't go into an unauthorised overdraft on his personal bank account then there's no reason for the bank to record any negative info.

My OH and I both have separate accounts because my credit rating is going to be bad for the next 12 months and hers is brilliant, so I don't want her to be affected by my bad credit by being financially associated. So each month, when I get paid, I keep by some money to pay my phone bill, child maintenance etc and transfer the remaining out of my account to hers, she then manages all our cash, gives us each a set amount of spending money and pays the mortgage and utility bills etc.

Works very well.

camuk81

Finack, as Gordon has said try keeping them apart.

I have a joint mortgage and one joint savings and that's it. My file is shot where as his is great and he managed to get a 7k loan in two minutes last week. I run a bills account and main account and that helps me keep an eye on everything. Can you help buy making advocate payments from your account.

I've done this in the past to help him out by paying money off on credit cards and loans. Just because you don't have a joint account doesn't mean you can't overpay.

fimack3

Gordon Hose, I really appreciate your response.

So we'll have a look at how much loan repayments would be and then together pay that off his credit card debt, not moving the debt from the existing cards.

It's good to hear about your system and that it works well for you - hopefully we can sort out similar.

fimack3

Thanks also, camuk - useful advice. At the moment I do give him money ad hoc and pay for big expenses myself, I just want to be more organised.
I think the way forward is to pool our income into the joint account, to pay off the equivalent of loan repayments on his debt and give ourselves each a set amount for our personal accounts (for phone bills etc)