What Are Joint Bank Accounts and How Do They Work?

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Joint bank accounts allow you to combine your finances into a single account — sharing the responsibility and benefits of pooling your money together.

If you’re about to get married or have already tied the knot, you may be thinking about opening a joint bank account with someone else. Families and business partners may also be interested in opening joint bank accounts, as they give each individual person listed on the account control over it.

What Is a Joint Bank Account?

A joint bank account is an account that multiple people can control. For example, if you and your spouse are listed as joint account owners, either one of you has full power over the account. You don’t need two signatures on any documents, such as checks, and you don’t need to be present or even authorize another joint owner from withdrawing or transferring funds.

This is why it’s important to only open a joint account with someone you can completely trust. If you’re concerned about giving up this type of access, it’s best if you stick with an individual account, in which you are the only one with authority over the account.

How Does a Joint Bank Account Work?

A joint account is essentially the same as an individual account, with respects to its features.

What Joint Account Holders Can Do

The main difference is that when you open a joint bank account, both people on the account have equal rights to the money inside. Both of you can deposit and withdraw funds at any time. Both get your own debit card and can use them wherever your card is accepted, and both can make payments from the account through online bill pay. 

The bank doesn’t differentiate between funds you or your joint account holder deposit. As soon as the money is in the account, each owner has a 100% right to the entire value, regardless of who made the deposit.

Fees and Responsibilities

You do need to be able to trust the other person; legally, they have the right to take every penny out of the account. If they overdraw, both of you will be responsible for any fees incurred. Additionally, if one or the other allows debts to go unpaid, creditors can seek money in shared accounts for repayment.

Your Transactions Aren’t Private

You’ll also have to give up privacy regarding your banking transactions to your joint owner as well. For example, if you make a debit card purchase or withdraw cash from the account, your joint owner will be able to see your transactions.

Double the Protection

Joint accounts offer double the protection, with each co-owner insured up to $250,000 by the Federal Deposit Insurance Corporation. This means the total insurance of your joint accounts within a single financial institution is $500,000. This can be helpful for couples with large cash balances such as receiving a deposit after selling a home.

Can You Have a Joint Bank Account if You’re Not Married?

Joint bank accounts are available to more than just spouses. You can open a joint account with a boyfriend, girlfriend or fiancé, as well as another family member or dependent.

For example, you might open a joint checking account with a minor child. Or, you could open a joint bank account with an aging parent, both to help manage their expenses and to have access to the account if they pass away, without having to consult a will or obtain a lawyer.

Benefits of a Joint Bank Account

Joint bank accounts offer a number of advantages, especially for certain types of account holders. Here are the primary benefits.

Encourages Trust and Teamwork

Getting a joint bank account requires an immense amount of trust. If you’re married, this means you are allowing your spouse full access to the money you deposit into that account. And to build this trust, you will need to have some ground rules and a shared vision for the money in that account. You might consider putting together a budget and financial plan that you both commit to.

Simplifies Your Finances

Combining your finances into a joint bank account can simplify the day-to-day of managing your money. This may include being able to streamline direct deposits into a single account, pay all bills from your joint account and combine savings into a joint account as well. It also simplifies saving for a common goal, as you can see in one account where you stand.

Double the Insurance

When you open a joint bank account, you gain access to $500,000 in total FDIC insurance. As you combine your savings together, you can protect a larger single balance within your joint account vs. requiring two separate accounts for the same amount of insurance.

Earn More Interest

If you open a joint savings account, you might be able to earn more interest as you combine your savings balances. Some top savings accounts or CD accounts pay more interest for larger balances, and a joint account may help you earn that higher rate.

Transparency in Spending Habits

If one joint owner is a bit more of a spendthrift than the other, the transparency of joint account transactions can help ensure accountability to the other partner. A joint bank account can also help you manage the finances of an aging parent or growing child.

Drawbacks of a Joint Bank Account

While a joint bank account has a number of benefits, there are also drawbacks to consider before opening one. Here are some of the cons to consider:

• Less autonomy: With a joint bank account, both account holders have full transparency into how funds are spent. This may mean less autonomy and privacy with the money you earn, as you may need to justify your spending to the other account holder.
• More vulnerable to financial betrayal: There’s no other way to say it — opening a joint account may put your money at risk if your joint account holder is not trustworthy. They have full access to all the funds in the account, regardless of who deposited the money. This is why it’s imperative to fully trust anyone you open a joint bank account with.
• Joint debt responsibility: When you open a joint bank account, the funds in that account are now subject to debt collections from either party. If the other account holder has a judgment against them, both account holders are responsible for that debt.

How To Open a Joint Bank Account

These are the steps you’ll need to take to open a joint bank account.

1. Choose the right bank and account type: The best bank for a joint account will not be the same for everyone. Factors such as whether you prefer to bank online or in person, minimum balance and deposit requirements, access to ATMs and interest rates can make a difference. These features might not hold equal weight for you and your joint account holder, so be sure to conduct your own research.
2. Gather necessary documents: To open a joint bank account, you’ll need to apply online or in person at a bank or credit union. Most applications require submitting your full name, address, email address, phone number and Social Security number or Tax ID number.
3. Visit a bank branch or apply online: The easiest way to open a joint bank account is online, and most major banks offer this option. However, if you prefer to conduct your business face-to-face, you might want to visit a local branch. Either way, you’ll need to provide the same information to open your account.

Note that for a joint account, you’ll have to provide documentation for each account holder. You both may need to be present to apply in person.

Tips for Managing a Joint Bank Account

If you’re sharing a financial account with someone else, you’ll need to communicate and set parameters to mange it successfully. If one person just blindly withdraws cash from an ATM without making note of it, the joint owner might end up bouncing a check because they were unaware of the status of the account.

Most banks offers online tools to track spending, set limits and send out notifications about the status of the account, and using these can be very helpful in preventing overdrafts or creating any other financial problems. For example, you might set up an alert to notify all account owners if there has been a deposit or withdrawal in the account. You can also get regular updates on your account balance, or warnings if its value falls below certain levels.

Alternatives to a Joint Bank Account

If two people want to share finances but have wildly different spending patterns, one alternative is to simply keep separate accounts. Another is to have a joint account that is used exclusively for monthly bills, with each owner keeping a separate account for their own personal spending.

You can also consider using a budgeting or spending app that will track your transactions. These types of apps can even make suggestions as to where you might be overspending in specific categories, such as entertainment or dining out.

Final Take

Opening a joint bank account with someone is a huge deal. While it will function largely as a solo account for usage purposes, you’re legally sharing both the money and responsibility with the other person, so make sure they’re someone you can fully trust.

The best strategy may be having both joint and separate bank accounts — allowing for a sharing of finances for household bills and shared expenses while having separate spending accounts for each spouse. This offers some autonomy on spending decisions while still promoting unity in handling bills and other household expenses. However, each household will have to determine which way of managing money works best for them.

Jacob Wade and Jennifer Taylor contributed to the reporting for this article.

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