Is a Joint Bank Account Right for You? | The Callaway Bank (2024)

The decision to open a joint bank account might not be as straightforward as you think. There are a variety of benefits and risks associated with joint bank accounts that all involved individuals should weigh before opening a new account.

Who Should Open a Joint Banking Account?

Joint accounts offer a new level of convenience and flexibility for the account holders that weren’t possible before. Many joint banking accounts are started by couples who move in together, get engaged, or are married. The sharing of a bank account is a big step for most relationships as it combines financials together and forces partners to manage money with another person’s perspective in mind.

Joint banking accounts can also be a great solution for helping someone manage their own money. Parents will often set up joint accounts with their children as they enter their teenage years in an effort to help teach healthy financial habits and money management. These same accounts are also helpful for individuals with aging parents who may need additional help overseeing their finances.

Another common reason for starting a joint bank account is for business partners to have equal insight and responsibility for the related finances. Entrepreneurs and business owners often have co-owners or other stakeholders who need access to banking information and funds for day-to-day operations to run smoothly.

The Benefits of a Joint Bank Account

  • Convenience: The biggest benefit and most commonly cited reason for opening a joint banking account is the convenience it affords multiple individuals when managing combined financials. Now all involved parties have equal visibility and responsibility for the management of their money. This helps co-owners pay for joint expenses easier, increase their buying power, and more.
  • Increased FDIC Insurance: Combined accounts ensure each co-owner is listed on the account, increasing the amount of money covered by the FDIC. For example, a joint banking account held by you and your spouse would be FDIC insured for up to $500,000 — which is double what an individual bank account is covered for.

The Risks of a Joint Bank Account

  • Financial Disagreement: Everyone has their own idea of how to best manage finances. This also leads to every individual having a different relationship with money. Joint banking accounts can cause disagreements and strife between account holders if they cannot agree on a middle ground strategy.
  • Lack of Privacy: Due to multiple people having access to the account, all account co-owners can see financial history and actions, such as payments, withdrawals, and balances. This level of transparency can make it hard for some account owners who wish to not have every banking action be able to be scrutinized or questioned.
  • Equal Responsibility: A joint banking account puts all co-owners on the hook for any overdrafts or issues associated with the account. This means the account assets are open for seizing to creditors, liens, and lawsuits if other co-owners get into financial or legal troubles.

The American Bankers Association Foundation and AARP have produced an infographic to help people understand the risks of joint bank accounts.

Is a Joint Bank Account Right for You? | The Callaway Bank (1)

Is a Joint Bank Account Right for You? | The Callaway Bank (2024)


Is a Joint Bank Account Right for You? | The Callaway Bank? ›

The Benefits of a Joint Bank Account

What bank is best for a joint account? ›

Summary of Best Joint Checking Accounts 2024
AccountForbes Advisor RatingAnnual Percentage Yield
Axos Bank Rewards Checking4.0Up to 3.30%
PenFed Credit Union Access America Checking4.00.15% to 0.35%
EverBank Yield Pledge Checking3.80.40%
Capital One MONEY Teen Checking3.80.10%
1 more row
Apr 12, 2024

Is it a good idea to have a joint bank account? ›

Having a joint bank account can help couples work together on finances and money goals. Keeping separate accounts might work better if you and your partner have very different money management styles. Holding a joint account as well as individual accounts might be the best solution for some.

What are the disadvantages of a joint bank account? ›

Shared Responsibility: Joint accounts require a high level of trust and financial responsibility. Both account holders have equal access to the funds and can make withdrawals and transfers without the other's consent, which can lead to conflicts if not managed properly.

What are the rules for joint bank account? ›

Joint: All transactions in the account must be approved and signed by all the account holders. If any one of the account holders dies, the account will be deemed inoperable, and the bank will pass on the balance in the account to the survivor.

Who owns a joint account when one person dies? ›

Joint bank account holders generally have the right of survivorship, which grants the surviving account holder ownership of the entire account balance. The surviving account holder retains ownership regardless of which owner contributed the money, and the account doesn't go through the probate process.

Do you get 2 cards with a joint account? ›

With a joint account you both get a pearlescent white debit card to use for your shared spending and saving.

Are joint bank accounts the secret to a happy marriage? ›

However, research from MarketWatch Guide shows that joint banking could lead to fewer arguments and increased relationship satisfaction. According to the study, 55% of couples who use solely joint bank accounts claim they never fight about money, compared to only 39% of partners who have personal accounts.

Can a spouse take all money out of a joint account? ›

Many married couples have joint bank accounts. Each spouse has the right to make deposits into the account, and, each spouse has the right to withdraw from the account any amount up to the total balance. It's common for married spouses to have joint accounts for practical and romantic reasons.

How much money should be in a joint account? ›

Experts often recommend that couples contribute to the joint account in proportion to their income. This means that if one partner earns 60% of the household income, they should make 60% of contributions to the joint account.

Does joint account hurt your credit? ›

Checking accounts, including joint accounts, are not part of your credit history, so they do not impact credit scores. Your credit report only includes information about your debts, and accounts have the same effect on your credit whether you are associated with the account as an individual or as a joint owner.

What do I need to know before opening a joint bank account? ›

What is needed to open a joint checking account is the same as what is needed to open a regular checking out. These items include proof of identification of both individuals, personal identification such as Social Security numbers, proof of address, and possibly cash to fund the account.

What is the limit on joint bank accounts? ›

Insurance Limit

Each co-owner of a joint account is insured up to $250,000 for the combined amount of his or her interests in all joint accounts at the same IDI. In determining a co-owner's interest in a joint account, the FDIC assumes each co-owner is an equal owner unless the IDI records clearly indicate otherwise.

Does a will override a joint bank account? ›

A joint account generally passes outside of the will because it is considered to be a non-probate asset meaning it passes directly to the surviving owner rather than through the will.

What is the best bank for married couples? ›

  • Our Top Picks.
  • Ally Bank.
  • Capital One.
  • Axos Bank.
  • Wells Fargo.
  • Presidential Bank.
  • LendingClub Banking.
  • Liberty Federal Credit Union.
4 days ago

Who pays taxes on a joint account? ›

Who Pays Taxes on Interest From a Joint Bank Account? If you have a joint account, you both may have to pay taxes on a portion of the interest income. However, the bank will only send one 1099-INT tax form. You can ask the bank who will receive the form because that person has to list the income on their tax return.

How much should a couple put in a joint bank account? ›

Experts often recommend that couples contribute to the joint account in proportion to their income. This means that if one partner earns 60% of the household income, they should make 60% of contributions to the joint account.

Is it better for a married couple to have a joint bank account? ›

After all, pooling one's resources seems to make a marriage happier and more stable—something most couples want when they first say “I do.” “Couples do seem to be happier when they have a joint account, at least for those first two years of marriage—and possibly later, too,” says Olson.

What is the best joint savings account for married couples? ›

The best joint savings accounts include options from Ally Bank, SoFi, and Alliant Credit Union, which offer competitive interest rates, minimal fees, and excellent customer service. David McMillin writes about credit cards, mortgages, banking, taxes and travel.

What are the two types of joint bank accounts? ›

In the United States, there are typically two types of joint accounts: survivorship accounts and convenience accounts.

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