Joint Bank Account: Is It a Good Idea For You?

Joint bank accounts are a big responsibility. They require both owners to trust each other and respect mutual agreements. On the flip side, sharing an account can make it easier to manage finances and shared expenses.

If you've never had a joint account before, you might feel uneasy about letting someone else access your money. This brings up many questions: Is a joint bank account a good idea? What are the rules, pros, and cons of shared checking accounts? 

Below, you'll find the answers for all these questions and more—with insights from a certified finance expert. Read on to discover if sharing an account is the right choice for you, or if you should explore other options.

What is a joint bank account?

A joint bank account is an account shared between two or more individuals. It operates like any regular savings or checking accounts. But in this case, all account owners can make deposits, payments, and cash withdrawals. Joint bank accounts aren't exclusive to married couples—unmarried couples and relatives can also have joint accounts in the U.S.

How do joint bank accounts work?

The biggest difference between a joint account and a regular account is that the first has more than one authorized user. This means that all account owners will receive a debit card and have access to its functions, such as making deposits and withdrawals.

“Each account owner can withdraw money at will, regardless of who deposited the funds—unless the bank provides an ‘and’ option, in which case you and the other owners would need to sign in to access funds,” says Amy Coroso, Certified Financial Education Instructor (CFEI) and author of Planning Your Retirement Life.

Users of a joint account also share the same responsibilities, meaning both parties pay taxes, fees, and any charges related to the account. “The bank will only provide a single 1099-INT for each account,” Coroso says. “Joint account owners will each need to contribute to paying the taxes, or come to a mutual agreement with regard to who is responsible.” 

When it comes to paying taxes, there's one exception to the rule: “If the couple is not married or not filing jointly, only one account holder will claim this on their taxes. If the couple is married and filing jointly, this is a non-issue.” 

Is a joint bank account a good idea for you?

Joint accounts have pros and cons. Since it's a decision that can impact your financial situation, you should take every aspect into consideration—and maybe even consult an adviser before making a final decision. 

Here are the pros and cons of a joint bank account:

Pros of a joint bank account

The biggest benefit of opening a joint bank account is convenience. For couples—married or not—it simplifies managing household expenses or savings for a mutual goal, such as a vacation or down payment on a home, Coroso says.

Another benefit for couples and relatives is that most joint bank accounts are Joint With Rights of Survivorship (JTWROS) by default. “If your spouse passes away, you will most likely have survivorship rights to the account and will have uninterrupted access to the funds,” Coroso says.

If you’re a parent considering sharing an account with your young children, it's a convenient way to teach them how to budget. “For college students, you can help them financially without waiting for funds to transfer,” she says.

Coroso also emphasizes that adults who support their elderly parents can benefit from sharing a bank account with them. “Sharing an account with aging parents helps to assist with paying bills, medical expenses, and generally managing finances,” she says.

Cons of a joint bank account

If you're thinking about opening a joint account, it's important to understand that both owners will have equal access to the funds. This could lead to problems such as excessive or unexpected withdrawals if you have different spending habits—a potential con. Plus, you'll lose privacy because all transactions will be visible for both account owners. 

You can't remove a person from the account, but most banks allow one of the holders to close it without the other's consent. “Joint account holders may leave themselves open to financial abuse, misuse of funds by their partner, and repercussions such as debt or bankruptcy,” Coroso says. 

It's also worth noting that if one of the owners has debt, the full balance of the account is subject to creditors. 

Joint bank account for couples: how to handle it?

It's not by accident that most people think joint accounts are only for married couples. Newlyweds are often the ones combining their income and expenses. If you're on the fence about making this decision, Coroso recommends a “me, you, and us approach” with both a joint account and individual accounts for each person.

“In this scenario, there is a joint account for a specific purpose, such as paying bills or saving for a shared goal,” says Coroso. “Each partner then maintains a separate account, where they deposit the remainder of their income. If partners have different priorities or spending habits, this alleviates tension.” 

It also allows couples to have privacy and autonomy while sharing financial responsibilities equally. “After necessities are funded and paid through the joint account, each partner can spend—or save—their own money according to what is important to them without feeling that they have to explain or defend themselves,” she says. “I also recommend each partner have their own retirement account.”

What about joint bank accounts for unmarried couples?

For unmarried couples, opening a joint bank account can be a good or bad idea depending on the strength and health of the relationship. Coroso suggests asking yourself the following questions:

• How long have you been together? 

• Do you live together and have shared expenses (rent, groceries, utilities etc)?  

• Do you have similar views and practices on finances and money management? 

• Are you pooling all of your money into a joint account or do you plan to maintain separate accounts as well?

Joint bank accounts Q&A

1. How to open a joint bank account?

Opening a joint bank account is much like opening an individual one. You can do it online or in person, depending on the bank you choose. In person, both account owners need to be present and provide personal information, including:

• Identification (driver's license, state ID, or passport)

• Dates of birth

• Social security numbers

• Current addresses

During the setup of a joint account, you can decide on additional services and settings to sign up for, such as online banking and account alerts. Keep in mind that requirements and services can vary among banks, so it's a wise move to check the bank's website when looking for the best institution for you.

2. How to close a joint bank account?

To close the account, you should first transfer any remaining money to another bank account or withdraw it. Generally, most banks allow one of the account holders to close the account, though some may require consent from both parties. You can find this information in your account agreement.

3. Can my partner and I have a joint bank account if we aren’t married?

Yes, unmarried couples can have joint accounts. The requirements are likely to be the same—providing identification and personal information—but you should check the bank's websites to confirm the steps to follow.

4. What are the rules for joint bank accounts?

The rules for joint bank accounts are mostly the same as any other account. However, you'll share the responsibility for depositing or withdrawing money with another person. The key difference is that your account can be closed without your permission or knowledge, depending on the bank you choose. 

Since different banks can have different rules, benefits, and requirements, it's advisable to dig into their website for more information or have a conversation with a bank representative in person for additional details.

In conclusion…

Joint bank accounts are all about trust, communication, and commitment. Both holders should commit to using the account only for its intended purpose and honoring mutual agreements. 

If your partner, family member, or friend is financially responsible and trustworthy, opening a joint bank account can work well for you. But if you have doubts, it might be wise to keep your finances separate.