Joint bank accounts: What you need to know
Combining finances can help people in many relationships spend, save and manage money more efficiently
Read, 3 minutes
A joint bank account generally works like any other checking or savings account. The difference is that two people—married or unmarried partners, parent and child, senior and caregiver—own the account and both have full control over it. That means each account owner can obtain a debit card, make purchases, may be able to write checks and make deposits and withdrawals—all with or without the other’s consent.
What are advantages of a joint bank account?
The main benefit of a joint bank account is that it makes your financial life easier. You can reduce the time, cost and hassle of paying bills by sharing household expenses such as mortgages, car payments, utilities and groceries. You can also save toward shared goals, such as a new home or a vacation.
Withdrawing cash and making online payments from one account also allows you to budget your money together. When you can both see your account activity, you might be less tempted to splurge or make secret purchases.
Did you know?
Pooling your money in a joint account might also help you meet minimum balance requirements, which may in turn qualify you for a waiver on maintenance fees, along with benefits such as higher interest rates and other rewards.
What are disadvantages of a joint bank account?
Some people feel more comfortable keeping individual accounts. And it can be stressful to a relationship if joint bank account owners have different spending habits or financial circumstances—for example, if one owner is carrying a lot of debt or has mismanaged money in the past. In those cases, separate accounts can make sense, at least until you’re on a firmer financial footing.
Additionally, third parties such as the IRS may take funds from a joint account to cover debt owed by one of the individuals. And remember that co-owners of a joint bank account can have access to and withdraw funds, and discuss the account with bank representatives, without the other’s permission.
Pros and cons of a joint bank account
Simplifies bill paying
Makes monitoring spending easier
Fosters shared decision making
Reduces individual privacy
Allows withdrawals without joint consent
Subjects full balance to creditors
How to open a joint bank account
Accounts can be opened in person at a branch office or online, depending on the bank you choose. If you plan to do it in person, both account holders will need to be present.
Regardless of where or how you open your account, you’ll need to provide basic identification: driver’s licenses, state IDs or passports. You’ll also be asked for personal information, including dates of birth, Social Security numbers and current address.
In setting up your account, you can decide how to manage and monitor it, including signing up for online banking and receiving account alerts (for one or both of you). You can also choose whether you’ll set up shared or individual online banking profiles.
How to close a joint bank account
There are a variety of reasons—the end of a relationship, divorce, a death in the family, a mutual decision to change banks—you might not want to keep your joint account open. Generally, one account holder can make that choice, though some banks require consent from both parties. Check your account agreement for details.
You should withdraw or transfer all money from the account before closing it. It’s also a good practice to open another bank account or have one open already, so that you can easily transfer funds.
If the joint account is with an online bank, each account holder may need to enter sign-in credentials and approve the closure. And you may need to provide identification, like a driver’s license, state ID or passport.
Did you know?
You usually cannot remove a person from a joint account without that person’s consent. However, in most cases you can close the account without their consent.
What about a linked account instead of a joint account?
For some people, linked accounts offer a middle ground between the joint and individual options. This kind of account allows you to easily make transfers among accounts, so you can coordinate savings and bill paying without granting the other party full access to your individual accounts.
Many people link checking and savings accounts at the same bank, but you can do so at different financial institutions. To do that, you’ll need to provide the following information:
Bank’s city and state
ABA routing number
A common strategy is to open a joint account as well as keeping separate accounts, then link them all. That allows you to maintain independent control of your individual finances while sharing a joint account for mutual savings and expenses.
A joint banking account is built on trust. Make sure you have honest—and ongoing—discussions about finances with the partner, family member or friend you share the account with. Those conversations can help your joint account become the cornerstone of a successful and enduring financial partnership.
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