Shared bank account

Goat

I am moving into a student house with 3 friends in September and we're thinking of opening a joint bank account for bills and group purchases.

Will the existence of the account link us together with regard to credit ratings, and potentially decrease my credit rating?

newfoundglory

No, it shouldn't affect your credit at all... providing you open an account which offers NO credit facilities. After all, you only need an account which provides the ability to pay bills/dd's/so's... you won't need an overdraft and cheque/debit card.

A basic bank account would be your best choice, with no borrowing, therefore protecting all account holders.

Goat

newfoundglory wrote:

No, it shouldn't affect your credit at all... providing you open an account which offers NO credit facilities. After all, you only need an account which provides the ability to pay bills/dd's/so's... you won't need an overdraft and cheque/debit card.

A basic bank account would be your best choice, with no borrowing, therefore protecting all account holders.

So are you saying that if the bank account does require a credit check then we will be financially linked? It would be useful for us to have debit cards for sharing the cost of everyday things like bread, milk etc. Also it would be useful to have an overdraft as there's going to be a lot of direct debits from it.

newfoundglory

Goat wrote:

So are you saying that if the bank account does require a credit check then we will be financially linked? It would be useful for us to have debit cards for sharing the cost of everyday things like bread, milk etc. Also it would be useful to have an overdraft as there's going to be a lot of direct debits from it.

Yes, if you open a current account with credit facilities in more than one name you will become financially linked. However, I suspect even if you wanted to do this you will have trouble in finding a bank which would open a joint current account with borrowing facilities in 4 names compared to the normal 2 (in fact I challenge you to find a bank which does this!). As this would not be a student account, any overdraft will also cost you money (ie you will pay interest on it!)

I strongly suggest you do not open a current account with credit facilities in joint names, as you will each be jointly and severally liable for any of the borrowing. This means that if you default (go over your limit) on the borrowing or the bank removes the overdraft facility, it can persue all of you, or just one of you for the entire amount owed. This may be okay if you TOTALLY trust the people you are living with. I trust my friends, but we're all students, and I would NEVER do this.

This is basically the same as a standard tennancy agreement with a landlord, where the landlord can sue just one or more of tennants for the whole outstanding amount owed.

When you have an account in more than one name, you have to decide how many signatures are required to operate the account (just one, or all account holders for example). You would usually want more than one signature, and ideally all signatures. You can get basic bank accounts with electron and solo cards with no overdraft, however you cant have a debit card on an account which requires more than one signature to operate it.

BWZN93

During my student days, it was common for people to open a 'STEP' account at Natwest - which is a basic bank account for paying DD's etc, and had paying in books, and all of our names could be on there.

We decided however to avoid the risk of financial links - I certainly loved my housemates, but didnt trust them with money not one iota.

With household bills, you can have a regular bill and not DD. Essentially, as soon as it comes in, split it equally (except phone bill :eek: ) and go and harrass everyone for their cheque. Then take it to the bank and pay in over the counter with the cheques and the slip on the bottom of the bill. That way = you all have proof you paid, no hassle, and if someone's cheque bounces, then its their fault and they pay their own bounced chq fees.

Oh - make sure all the bills are in JOINT names - never just your own - as when you move out, you will be the one getting screwed.

Jo xx