Pros And Cons Of Joint Bank Accounts | Chase (2024)

Quick insights

  • A joint bank account can be a checking or savings account managed by multiple people.
  • Each person on a joint bank account has the same access to deposit, spend, transfer and withdraw money.
  • Managing a joint bank account successfully involves open communication and general agreements on the account activity.

Some consider checking and savings accounts essential for personal finance. They help with the most common expenses and financial goals. What if multiple people want to manage money together? That’s where joint bank accounts can come in.

Introduction to joint bank accounts

A joint bank account usually refers to a checking or savings account shared by two or more individuals. The account’s defining feature is the equal financial access provided to each account holder.

A very common use of joint bank accounts is managing shared financial responsibilities, such as household expenses. This type of account has features that make it a practical option for couples, business partners and others who need to manage shared finances.

Most common uses

People find joint bank accounts useful in a variety of personal and professional contexts—the most common being:

  • Couples: Spouses often have joint bank accounts to manage household finances together. This allows for easier budgeting, bill payments and tracking of shared expenses. Note: Couples don’t have to be married to open a joint account.
  • Parents and children: Parents may open joint accounts with their children to help manage their finances, teach them about money management and provide financial oversight.
  • Business partners: Joint accounts can be used by business partners to handle business transactions, manage operational expenses and, overall, streamline financial management.
  • Caregivers and dependents: Joint accounts are useful for caregivers who manage the finances of dependents, such as elderly parents or individuals with disabilities. Sharing an account can help all parties ensure that bills and other financial obligations are met.

How to open a joint bank account

Opening a joint bank account can be straightforward when applicants know how the process generally works.

1. Choose a financial institution

Decide on a bank, credit union or other company where you want to open the account. Banks with branch locations are popular options. These days, however, there are many options to navigate. When choosing where to open a joint account, consider factors like account fees, interest rates and branch or ATM locations.

2. Gather required documents

Applicants will typically need to provide the following documents to open a joint bank account:

  • Identification: Government-issued ID with a photo, such as a driver’s license, passport or state ID.
  • Social Security number: Required for identification and tax purposes.
  • Proof of address: Utility bills, lease agreements or other official documents showing current address.
  • Initial deposit: Some banks require a minimum deposit to open a joint bank account.

3. Visit the institution or website

Visiting the bank together can be helpful for all the people opening a joint bank account. The level of service and security can make the process more comfortable. Being together can also be useful when opening an account online, depending on the information that’s required.

4. Complete the application

A joint account application probably needs personal details for all potential account holders. This may also be the case for online applications. Sometimes, one person could complete the application, but the other will have to verify or provide certain information later.

5. Agree on account terms

All parties will need to sign the account agreement and other necessary documents. These will outline important policies and account details. Read all the terms and conditions of the account. It’s important to understand the rights and responsibilities of each account holder before signing any agreements.

6. Deposit money

Make any initial deposit required by the bank. If a certain amount isn’t required to open the account, there might be an amount required for the bank to waive monthly service fees.

7. Receive account details

Once the account is set up, you will receive the account details. Some could arrive right away by email or in an online banking portal. Checks, debit cards and online banking information are usually sent separately.

Pros and cons of joint bank accounts

Joint bank accounts are thought of as useful ways to manage shared finances, such as bills and everyday expenses. There are pros and cons, however.

Advantages of a joint bank account

  • Convenience: Joint accounts streamline the process of paying shared bills and managing common expenses.
  • Shared responsibility: Each account holder can deposit and withdraw money, making it easier to handle joint financial obligations.
  • Emergency access: In the event of an emergency, having joint access ensures that at least one account holder can access money without delay.
  • Transparency: Joint accounts can promote financial transparency between account holders, reducing misunderstandings about shared finances.

Possible downsides of a joint bank account

  • Individual control: Each account holder has equal access and control over the account, which means either party can withdraw or spend money without the other's consent.
  • Financial disputes: Joint accounts can lead to conflicts if account holders have different spending habits or financial priorities.
  • Debt liability: If one account holder incurs debt or has legal judgments against them, creditors can potentially access the money in a joint account.
  • Impact on relationships: Financial disagreements can strain personal relationships, especially if one party feels the other is not contributing fairly or spending irresponsibly.
  • Closure process: Closing a joint account can require the consent of all parties, complicating the process if relationships deteriorate.

Understanding ownership in a joint bank account

Joint bank accounts provide equal ownership of the money in the account. Each account holder has the same access to the account and the money in it—they can deposit and withdraw money independently. If one account holder dies, ownership typically passes to the surviving account holder(s), unless otherwise specified.

An ongoing dialogue about a joint bank account helps maintain trust and cooperation while sharing ownership. Some points to discuss could include changes in financial circumstances, unexpected expenses or concerns about the account.

Managing a joint bank account

To manage a joint bank account, clear guidelines, open communication and regular monitoring are important. Each owner should agree on how the account will be used and who is responsible for what. This includes deciding how much each person will contribute, which expenses will be paid from the account and how to handle large withdrawals or transfers.

Joint ownership can lead to complications if account holders have differing views on how to manage the money. Disputes over joint bank accounts can be complex and might need to be resolved legally, such as in mediation or court proceedings. Clear, constant communication and agreement on account management can prevent issues.

In summary

A joint bank account is a shared account that multiple people can use to manage money. The account holders have equal access to the money, whether that’s depositing, spending or withdrawing money. This type of account is often used to manage shared expenses and improve financial transparency. Managing the account effectively still requires trust and clear communication between account holders.

Pros And Cons Of Joint Bank Accounts | Chase (2024)

FAQs

What are the pros and cons of joint bank accounts? ›

Pros of shared accounts include a shared approach to money and better-informed couples. Cons of shared bank accounts include lack of privacy and shared consequences to financial decisions.

Can one person withdraw money from a joint account? ›

The money in joint accounts belongs to both owners. Either person can withdraw or spend the money at will — even if they weren't the one to deposit the funds. The bank makes no distinction between money deposited by one person or the other, making a joint account useful for handling shared expenses.

Who owns the money in a joint bank account when one dies? ›

Most joint bank or credit union accounts are held with “rights of survivorship.” This means that when one account owner dies, the money passes to the surviving owner, or equally to the rest of the owners if there are multiple people on the account.

What are the pitfalls of joint accounts? ›

A joint account might damage your credit score

Opening a joint account adds a financial link to the other person. This means companies will look at both of your credit histories as part of any credit checks.

Should my wife and I share a bank account? ›

Key takeaways

Couples who share expenses should consider a joint bank account to track spending. Even if both partners are different types of spenders and savers, joint accounts show you where your money is coming in and going out.

Will joint account hurt my credit? ›

Using a joint bank account does not affect your credit score.

Who owns the funds in a joint account? ›

Joint account holders have equal access to funds but also share equal responsibility for any fees or charges incurred. Transactions conducted through a joint account may require the signature of all parties or just one.

Can money be seized from a joint account? ›

Creditors might be able to garnish a bank account (also referred to as "levying" the funds in a bank account) that you own jointly with someone else who isn't your spouse. A creditor can take money from your joint savings or checking account even if you don't owe the debt.

Who pays taxes on a joint account? ›

Unless otherwise specified, all owners of a joint bank account are responsible for paying taxes on it.

What if my husband died and I am not on his bank account? ›

If your husband passed away and you are not listed on his bank account, the account will likely go through probate unless it is a joint account or has a named beneficiary. Probate is a legal process where the court oversees the distribution of assets.

Does a joint account get frozen when one person dies? ›

Joint bank accounts

Couples may also have joint bank or building society accounts. If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.

Do you pay inheritance tax on a joint bank account? ›

Estate Tax Consequences

If the surviving joint owner is not a spouse, then the fair market value of the entire account will be included in the decedent's estate. If the surviving joint owner is the surviving spouse, then only 50% of the fair market value is included in the value of the decedent's estate.

Why a joint account is a bad idea? ›

Lack of control. You cannot control how the other party spends your money. If your partner decides to spend frivolously, you will both feel the blow. This sort of problem can lead to many fights about what is necessary to spend on and what isn't.

What is the disadvantage of joint bank account? ›

Loss of Individual Control: One of the primary drawbacks of a joint savings account is the loss of individual control over funds.

What's the best bank for joint accounts? ›

Best joint bank accounts
  • Best for checking/savings combo: SoFi Checking and Savings.
  • Best savings account: LendingClub LevelUp Savings.
  • Best from a major bank: Capital One 360 Checking® Account.
  • Best from a credit union: Alliant Credit Union High-Rate Checking.
  • Best for families with kids: Capital One Kids Savings.

Is a joint bank account a good idea for a couple? ›

With joint accounts, spending can be easily viewed by both spouses, and that level of openness can be reassuring. Though those with separate accounts also may have open and honest relationships, it may be that the most harmonious relationships tend to lean toward joint accounts.

Can a joint bank account be closed by one person? ›

Your bank may allow just one person to close the account over the phone, in person, or online. However, some banks require both account holders to visit in person, either together or separately. Because policies vary by bank, contact yours to find out if you can close a joint account on your own.

Are joint accounts with parents tax implications? ›

A joint bank account also comes with multiple tax problems. For example, if the account earns interest, you and your parents must file the interest in your federal income tax returns. Additionally, when your parents die, you automatically become the owner of all assets in the joint account.

What happens to a joint bank account when one person does? ›

Joint bank accounts

If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.

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