couple holding a piggy bank

Is A Joint Bank Account Right For You?

Maybe you just got married or moved in with a long-term partner. Or you’re starting a business with other people. Perhaps you’re suddenly in a caregiver role for an aging parent or trying to figure out the easiest way to share spending money with your kid at college. These are all situations in which sharing a bank account could be helpful and convenient. However, there are also potential downsides to shared bank accounts. In this article, we’ll walk you through everything you need to know about joint bank accounts for couples and other types of relationships.

What Is A Joint Bank Account?

A joint bank account is a checking or savings account that two people share ownership of. The joint owners have equal control over and access to the account. While joint bank accounts are common among married couples, this type of account can be useful to other types of relationships as well, such as unmarried, co-habitating couples; a parent and child in college; a senior and their caregiver relative; business partners; and more.

With a joint bank account, all owners named on the account can access the funds, meaning withdraw cash, write checks, and make online bill payments and everyday purchases with a debit card. Some transactions may require both signatures. The joint accountholders also share equal responsibility for any fees or charges.

So, a basic foundation of trust and cooperation should be established before opening a joint bank account. Joint budgeting is also a good idea for a joint checking account. You may even want to create a set of rules for both accountholders to abide by.

Consider both the benefits and downsides to a joint bank account

Benefits of a Joint Bank Account

Is a joint bank account right for you? The answer will depend on your specific situation. Learn about the potential advantages of having a joint bank account to see if it could benefit your relationship.

  • Couples can use a shared checking account as a way to pay household bills and expenses from pooled funds.
  • Parents can have a joint account with their older teenagers or college-age kids to provide financial assistance and help them learn how to budget and manage funds responsibly.
  • Seniors can add one or more of their adult children to a joint bank account to help them manage bills, everyday purchases, and other routine banking tasks.
  • Having a joint account comes with certain privileges upon the death of one of the owners: “Rights of Survivorship” means all funds will pass to the surviving owners, and the account will be considered an individual account. And “Tenancy in Common” means that, if one accountholder passes away, their share of the account passes to their estate.

Be sure to set rules and boundaries ahead of opening a joint bank account

Downsides To a Joint Bank Account

Of course, there are some potential pitfalls that come with sharing a bank account. Review these downsides so you can determine if a joint bank account will work for you.

  • Trust can be an issue–one accountholder’s spending habits affect the other, so trust may be broken in the course of sharing a bank account.
  • Depending on your tax situation (self-employed, business owner, etc.), sharing a bank account can make tax time more complicated.
  • Divorce can also complicated shared accounts, especially if one spouse tries to withdraw more than half of the shared funds.
  • When sharing an account with a teen or young adult child, you want to set them up for future independence, not have them become too reliant and comfortable with the ease of having parents add funds to the account
  • Both accountholders can view all transactions in the joint account, which takes away privacy. Even if you and your partner agree on how much discretionary spending money you each get, you may not want each other to know about every single purchase.
  • Joint accounts are susceptible to paying any debts and court orders, like child support, back taxes, or garnishments

34% of couples have a mix of joint and separate bank accounts

Should I Have an Individual As Well As a Joint Bank Account?

Luckily, it’s not an either/or choice between having a joint or individual account. You and your partner or child can have multiple bank accounts. For example, many couples maintain a joint account for shared household expenses, but also keep their own individual accounts for discretionary purchases. That way, your partner doesn’t need to know how many fancy coffee drinks you buy in a week. Keeping your own individual bank account also allows you to set aside money for gifts and surprises

You can always link your shared and individual accounts to make it easy to move money back and forth, while still preserving privacy and independence.

Finally, it’s not fun to think about, but if things go south in your romantic or business relationship, already having an individual account will make it easier to separate finances and assets.

How to Open a Joint Bank Account

Opening a joint checking or savings account follows the same process as opening an individual account. You just need to provide information for both the accountholders. At F&M Bank, you can conveniently open an account online or visit your nearest branch location in the Shenandoah Valley. When prompted, simply enter the additional applicant information. Before you get started, collect basic information for all account holders such as addresses, dates of birth, ID information, and Social Security numbers. During the set-up process, you can decide on alerts and other settings for one or both accountholders.

About F&M Bank

F&M Bank delivers comprehensive banking services to the Shenandoah Valley community and beyond. With local decision makers streamlining the process, our friendly team treats each customer like family. Learn more about our personal banking services, read our article on “Types of Account Ownership,” and open a new checking or savings account online.