Everything You Need to Know About Joint Bank Accounts

Opening a joint bank account poses many questions. How do you open an account with another person, such as a spouse? What are the pros and cons? Are there any requirements? Can you close the account at any time?

In this article, we answer all your questions about joint accounts, while also providing information on how to make the most of this arrangement.

8 Questions To Ask Yourself Before Opening a Joint Bank Account

There is no shortage of things you need to know before opening a joint bank account. Answering these eight questions will help bring clarity to your situation.

How does a joint account work?

With a joint account, you and at least one other person have the power to manage all aspects of the account.

What should I consider before opening a joint account?

There’s a lot to consider, including whether or not you can trust the other person, how you’ll use the funds in the joint account, and whether you’ll still maintain a separate account.

Can I open a joint bank account online?

Yes. Opening a joint bank account online is similar to doing so in person at a local branch. The primary difference is that you complete the entire process online.

Should couples have joint or separate bank accounts?

This is a decision that couples must make together. Some are comfortable combining all their money in a joint account. Others would rather use separate bank accounts. And of course, there are those that use a combination of both.

Can you have a joint bank account if you’re not married?

Yes. You can open a joint account if you’re not married. For example, you may want to do so with a romantic partner or business partner.

Who owns the money in a joint bank account?

As a joint account holder, there’s something you need to know: both individuals own the money in the account.

You can both deposit, withdraw, and manage the funds in the bank account.

What are some of the risks of opening a joint bank account?

The primary risk is that the other individual will act irresponsibly, such as by spending money that is to be used for paying expenses. Another risk is that you could part ways, which means you have to decide how to split the funds.

How do I close a joint bank account?

Either party can close a joint bank account at any time. Doing so is as simple as contacting the bank and withdrawing all remaining funds.

The Pros and Cons of Opening a Joint Bank Account

There are both pros and cons to opening a joint bank account. Don’t agree to become a joint account holder until you’re familiar with all of these.

Pros

Easier to cover unexpected expenses

As these expenses come to light, both individuals have immediate access to funds. Also, there’s no discussion as to who should pay for the expense from their separate account.

Easier to pay bills

A joint bank account makes it easier to pay joint expenses, such as the mortgage and utilities.

Easier to budget for regular expenses

With a budget that outlines your regular expenses, you know how much you need in your joint account to cover them.

Greater convenience

When some or all of your money is combined, it can be more convenient to save and/or pay bills.

Greater sense of equality

With a joint bank account, both individuals feel that they are equal in regard to household expenses and finances.

Save on banking fees

With two accounts, you run the risk of paying two sets of banking fees. But with a joint account, there’s only one set of fees.

You can earn more interest as your finances are combined

The more money you have in your account — typically a savings account — the more you’ll earn in interest.

Cons

Potential arguments and disagreements

When your money is combined, there’s a greater risk of an argument or disagreement. This holds true no matter if you’re married or have a civil partner.

Harder to buy surprise gifts

When the other person has access to your account, there’s no surprising them with a gift. All they have to do is look at recent activity to see what you’ve purchased.

Can be difficult to separate finances in the event of a breakup or divorce

If you divorce as a married couple or break up with a partner, it can be difficult to decide who gets what.

Loss of privacy

There are times when you want some privacy with your money. For example, as a married couple, you both may feel better if you have some money for yourself. You lose this privacy with a joint account.

If an account holder has a poor credit history, it can affect the partner

An example of this is someone with a poor credit rating making bad financial decisions. This can affect you over the long run.

Applying for a Joint Bank Account

Applying for a joint bank account has never been easier. This is due in large part to the ability to apply online.

Here’s what you need to work out:

If you’re both eligible

Contact your bank of choice to learn more about eligibility requirements.

What you need to apply

Generally, both bank account holders will need proof of identification. Many banks also require you to make a minimum deposit.

How long applications will take

Regardless of bank account type, you can typically open an account within minutes.

How the credit checks work

This depends on the bank. Some will run a credit check to learn more about the credit rating of both individuals. Others don’t do this. Check on this before starting an application.

What to do if you haven’t heard anything

If it’s taking longer than expected to hear from your bank, call customer service for an update. They can tell you the status of your account.

What to do if you’ve been denied

If your application is denied, ask for more information as to why. You can then use this to your advantage when searching for another bank.

6 Things to NEVER do When Setting Up a Joint Account

Applying for a joint bank account is easy enough, but you don’t want to rush the process. There are six things you should never do:

Don’t think an even split is always the answer

For instance, it may be best if you open a joint account while also maintaining separate savings accounts.

Don’t lie about how much you owe

Be clear with the other bank account holder about your financial circumstances, including any debt that you have. Do the same with the bank.

Don’t lie about how much you earn

Just the same as debt, tell your joint account holder how much you earn. And of course, don’t lie about your income if the bank asks.

Don’t give one person control of the money

Joint ownership means joint ownership. Both of you should have equal control over the money.

Don’t forget to leave a buffer

Doing this protects against running your balance down to zero. This is particularly important if you’re opening a joint checking account for shared expenses.

Don’t immediately share credit cards

Just because you’re opening a joint bank account doesn’t mean you should also share credit cards. Take some time to see how things play out with your joint bank account.

Financial Protection for Joint Accounts

Each account holder is insured up to the Federal Deposit Insurance Corporation (FDIC) limit of $250,000 per depositor.

If you open an account at a credit union, you’re insured up to the National Credit Union Administration (NCUA) limit of $250,000 per depositor.

How to Handle Disagreements With Other Account Holders

The first rule is to keep your cool. From there, explain your side and carefully listen to the other account holder(s).

If you’re unable to negotiate and compromise, it may be time to close your joint account.

The Legal Rules on Dividing Joint Bank Accounts

If you’re married, you’ll generally divide joint bank accounts in half. This means that both individuals receive 50 percent of available funds.

If you’re not married — such as if you only have a civil partner — there’s more gray area. It’s still best to split the funds 50/50 so you can move on.

Frequently asked questions (FAQs)

Here are some of the most frequently asked questions pertaining to joint accounts:

What happens when a joint account is frozen? 

This can happen for many reasons, such as suspicious activity. If you find that your account is frozen, contact the bank to find out why and learn more about your options.

Do joint bank accounts have overdraft facilities? 

Yes, you can open a joint account with overdraft protection.

How long does it take to open a joint account? 

You can typically open any bank account type online within a matter of minutes. This is particularly true if both of you have all the necessary information on hand.

Can you have an individual account and a joint account with one bank? 

Yes. You can maintain both an individual account and a joint account with the same bank or credit union. You may even be able to link accounts so you can transfer money.

What happens if you need to close the account? 

Either individual can close a joint account at any time. Of course, if you plan on doing this, it’s best to discuss your reasons with the other account holder.

Can one person withdraw money from a joint account?

Yes. Every owner of a joint account has full access to the funds without the requirement of asking permission.

What’s the best way to use funds in a joint bank account?

There are many options, such as using the funds to pay shared expenses or manage household expenses.

What joint bank account type is best?

This depends on how you plan to use the funds. If you’re paying expenses, you’ll want a checking account. But if you’re saving for something special — like a new home — a savings account makes more sense.

Does your credit history matter?

This depends on if the bank checks your credit history and score as part of the application process. Fortunately, if one person has good credit, that’s often enough to receive approval.

Final Thoughts

The above information should be enough for you to confidently decide if a joint bank account is a good financial decision.

Once you’re ready to proceed, discuss the finer details with the other account holder(s) to ensure that you’re on the same page.