Joint Bank Accounts: How and When They Work - NerdWallet (2024)

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Joint bank accounts belong to multiple people, each of whom can contribute to and use the money in the account. Such accounts can be a good fit for couples, adults assisting their aging parents and parents who are teaching their kids about money management.

On paper — and in an ideal world — joint accounts provide easy collaboration for spending and saving. But realistically, they require more self-awareness and trust than the typical bank account.

Here's a closer look at what to consider before opening a joint account.

» Skip ahead to compare some solid checking accounts.

Joint Bank Accounts: How and When They Work - NerdWallet (1)

Is a joint bank account a good idea?

A joint bank account can be a good idea as long as you and the other account holder have a strong, trusting relationship. Whether you’re planning to share an account with a child, significant other or aging parent, communication is essential. That may mean having difficult discussions about spending and saving habits. As uncomfortable as it may be, initiating these types of conversations can prevent even bigger headaches later.

“It’s important to lay out expectations with the other account holder,” says Carrie Houchins-Witt, a financial advisor. “If your teenager hasn’t quite grasped the concepts of saving and spending and personal responsibility, be careful about putting money in the account and expecting them to budget properly without your guidance.”

» MORE: NerdWallet’s best checking accounts

Pros of joint bank accounts

  • Parents can monitor a child’s spending habits and can quickly transfer money to a joint account when necessary.

  • Couples can use cash in a joint account to cover shared expenses such as rent, utilities and food, as well as shared savings goals, such as setting aside money for a vacation. Joint accounts can be helpful for married couples who are combining assets as well.

  • Adult children can help aging parents manage their finances.

  • A joint account can be set up so that if a parent dies, an adult child has immediate access to funds in the account, avoiding a potentially lengthy legal process.

  • Each account holder is federally insured up to $250,000 at a bank or credit union. (Joint accounts and individual accounts are considered different ownership categories, so a person can be insured for up to that amount in a joint account and separately for up to that amount in an individual account. Learn more about FDIC insurance.)

» MORE: Should I keep accounts open at multiple banks?

Cons of joint bank accounts

  • A child may spend too freely and become overly reliant on mom or dad refilling the account.

  • Co-owners on the account are both responsible for fees, such as overdraft charges.

  • If one holder lets debts go unpaid, creditors can go after money in the joint account.

  • Both holders can see transactions in the account, which can present privacy issues.

» Looking for savings options? See NerdWallet's best savings accounts

Joint bank accounts and marriage

Joint bank accounts are a common consideration for newlyweds since the couple has just legally combined their assets. Some couples may find it valuable to open a joint account even before the wedding so they can use it to pay for the event. Couples who live together before marriage may also find a joint account useful for paying for household expenses. Another benefit of joint accounts is that FDIC insurance covers $250,000 per co-owner, so the total coverage for the account is $500,000.

Before you open an account, make sure you know the rules on your joint account, including who is allowed to close it. According to the Consumer Financial Protection Bureau website, “In most circ*mstances, state law provides that anyone who can write checks on the account has the ability to close the account.”

If you’re married — especially newly married — talk to your spouse about whether and how they’d like to set up a joint account with you. If you do decide to open a joint account, keep in mind that you don’t have to combine all of your money with your spouse’s. Some married couples share a joint account while also maintaining separate personal accounts, even if they only use those accounts as “fun money.”

How to open a joint account

Setting up a joint bank account is much like opening a personal one. Here's what the process will probably look like:

  • Select the "joint account" option during the application process with your bank.

  • Provide the bank or credit union with personal information for all account holders, such as addresses, dates of birth and Social Security numbers.

If you’re opening a joint account with a significant other, you don't necessarily need to close your individual account. You may want to have money of your own for personal expenses or for gifts and surprises.

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Joint accounts for teens

If you have a teenager, you might also consider opening a teen checking account. These accounts can have lower fees and may place daily restrictions on how much cash your child can withdraw from an ATM. However, if your bank or credit union doesn’t offer teen accounts, you may need to open an account at a different financial institution, which could make it more difficult to transfer money easily. Check with your bank for options for opening a bank account for your teen. (See our picks for top checking accounts for teens.)

Joint Bank Accounts: How and When They Work - NerdWallet (2024)


How do joint bank accounts work? ›

A joint account is a bank or brokerage account shared by two or more individuals. 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.

What are the rules for joint bank account? ›

All joint bank accounts have two or more owners. Each owner has the full right to withdraw, deposit, and otherwise manage the account's funds. While some banks may label one person as the primary account holder, that doesn't change the fact everyone owns everything—together.

How do you use a joint account effectively? ›

When opening a joint account, there are a few things you can do to make the most of the account and to manage money as a couple.
  1. Be open about your credit history and any debts. ...
  2. Make sure it is equal. ...
  3. Create a shared savings goal. ...
  4. Consider a separate bank account. ...
  5. Track your joint budget. ...
  6. Share financial responsibilities.

Does it matter who is primary on a joint account? ›

Primary account holders are legally responsible for the account. Primary account holders can name others as "authorized users" on the account, but they remain responsible for it. Joint account holders share responsibility for that account and both are considered primary account holders.

What are the disadvantages of a joint account? ›

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. If they have a poor credit history, this might lower your chances of acceptance.

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

Joint Bank Account Rules on Death

"The joint owner becomes the legal and equitable owner of all funds in a joint account at the instant of death," says Doehring. "It does not become part of the probate estate."

What proof is required for joint bank account? ›

Together, you can choose the checking or savings account that works for you. To open a joint account, you'll need: Identification for both account owners, like a driver's license, state ID or passport. Personal information for both account owners, including your date of birth, Social Security number and current address.

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

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.

What are the 2 types of joint accounts? ›

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

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Can you still withdraw money from a joint account if one person dies? ›

The account is not “frozen” after the death and they do not need a grant of probate or any authority from the personal representatives to access it. You should, however, tell the bank about the death of the other account holder.

How much money is safe in a joint bank account? ›

Under the FSCS, the first £85,000 (as of January 2017) a depositor puts into their account (or £170,000 if your money is held in a joint account) is protected in the event that the bank or building society goes bust.

Who pays taxes on a joint bank 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.

Does a will override a joint bank account? ›

This joint account would then be passed on to that particular child and not be spilt equally among all of the children. 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.

Who controls a joint bank account? ›

You need complete trust in the co-owner, as they're able to spend all the money in the account. Generally, any account holder who can write checks on the account can close it, which means you're not always in full control of your joint assets.

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

Previous studies have shown a link between holding a joint bank account and having a higher quality relationship. Perhaps couples with a shared account might prompt each other to consider how their purchase will affect their partners or might facilitate transparency around finances.

Do you need both parties to open a joint bank account? ›

Both parties do not necessarily need to be present to open a joint checking account. Many accounts today can be opened online, therefore, both parties do not need to be present but the identification of both parties will need to be provided.

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 happens with a joint bank account when you split up? ›

In many cases, a judge overseeing divorce proceedings will award each member of a splitting couple 50% of what's in a joint bank account. There can be exceptions, but your best bet is to leave that money alone until you receive instructions on what to do with it.

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