Joint accounts: All you need to know

A joint bank account would work well provided you and another account holder have a trustworthy relationship.

joint accounts
A joint bank account would work well provided you and another account holder have a trustworthy relationship. Couples can opt for a joint account as it would make it easy to share the expenditure like rent. If you’re opening a joint account with your spouse, you don’t have to close your individual account as it can always have some money for personal expenses or even giving surprises.

In this article

Joint bank accounts are checking accounts that are owned by numerous people in which everyone could contribute and also utilize the money. Joint accounts are usually preferred by couples; parents and teenagers; and adults assisting their parents, who have become senior citizens.

Theoretically, joint accounts offer effortless collaboration to avail banking services. However, practically, it involves a great deal of trust than maintaining a regular bank account.

Is opening a joint account risky?

A joint bank account would work well provided you and another account holder have a trustworthy relationship. Having a proper understanding is crucial if you’re planning on sharing an account with your child, spouse, or elderly parents — there might be disagreements as each one would want to use the account in different ways. It is advisable to discuss how you are planning to manage the money before opening the account. 

In some cases, parents would open a joint account expecting their teenager to be on the same page, but end up with a misunderstanding. Financial advisors recommend depositing less money in joint bank accounts with children to train them to budget judiciously and make decisions with your guidance.

Advantages of joint bank accounts

  • Parents could supervise their child’s spending habits instead of leaving them alone with a large amount of money. They can also transfer money instantly to a joint account in case of an emergency.
  • Couples can opt for a joint account as it would make it easy to share the expenditure like rent.
  • Children can help their parents who have become senior citizens with a joint account. The child would also have immediate access to funds in the account and would keep the child away from an extensive legal process, in case the parents pass away.
  • Moreover, joint accounts are insured up to $250,000 individually for each holder by Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA).

Disadvantages of joint bank accounts

  • Children may spend the money whenever they want and the parents would not have the money in case of an emergency, especially if they are unaware of the current balance.
  • One of the holders could empty the account.
  • If one of the holders fails to meet deadlines or leads to an overdraft, each holder would be responsible for paying the penalty and fees.
  • If one of the holders fails to repay a debt in their individual account, creditors would demand the repayment from the joint account.
  • Since every holder has access to the list of transactions, there is no room for privacy.

Opening a joint account

  • Opening a joint account has the same procedure as opening a personal account.
  • When you open the application form, select the joint account option.
  • As always keep the address, date of birth, and Social Security number of everyone ready.
  • If you’re opening a joint account with your spouse, you don’t have to close your individual account. The individual account can always have some money for personal expenses or even giving surprises.

Specialty accounts

A teen checking account could be a viable option for teens as these accounts usually charge low fees and impose daily spending limits. However, you would not be able to open an account in the same bank; thus, transferring funds between accounts would take time and include charges.

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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