Sharing Student Bank Accounts

I was asked a few weeks ago – “Should I share a bank account with the other six students in my flat next year to pay the bills?”  With working in IT security and risk management for 20 years my immediate thinking was to avoid something like this. So I did some research on sites such as The Student Room and other sites around the internet. I thought it would useful to document what I found to save other people hunting around.

General student finance sites seem to say it is a good idea but posts in other forums seem to suggest it causes disagreements and in some cases some people run off with the money. In the end I decided that it is a good idea provided there are some ground rules to protect all the students in the house.

  1. Yes, open a bank account but with all the names on the account. It means you add to your credit record which is good for the future.
  2. Only use the account for household bills (e.g. electricity, broadband) but not for other purchases such as food. Including food seems to be where the disagreements start with some students being there 5 days a week and others 7 days a week it can seem unfair all paying the same.
  3. At the start put in a little extra into the account as a buffer in case the bills are a bit more. You do not want to get a bad credit record and you can split the extra at the end of the year. You are creating a clean credit record that will be important later in life when a loan or mortgage is needed.
  4. Even if you trust the people, don’t have debit cards or cheque books that require just one signature or PIN as it is a temptation when they running a bit short. If you are given a debit card either cut them up or get one person to hold the card and another to hold the PIN number. It then needs two people to do anything on the account. Setting up direct debits or signing cheques should require more than one person.
  5. When you close the bank account your credit record may be linked to the other people in the flat for five years and if they have a poor credit history in the future it may have an influence on your credit score. So before you apply for a credit card or mortgage check your credit score. Moneysavingexpert.com has information about credit scores. If you are linked then apply for disassociation with the person on your credit card file.

In addition to your bank account, rent payments will now be added to Experian credit records from Spring 2013 but they won’t be linked to your flat mates. See Moneysavingexpert.com for details.

If you want to add to the hints and tips or you find this useful please let me know.

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