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Co-managing your money with another person could be necessary for multiple reasons, from merging your finances as a married couple to caring for an elderly parent.
Opening a joint checking account is one way for two people to share management of their money. But when you open a joint account with someone else — whether a spouse, parent or another person — you also share responsibility for the account and all of its costs.
Let’s look at some things to know about joint checking accounts and how they work.
- What is a joint checking account?
- How do joint checking accounts work?
- How to open a joint checking account
- What’s next? Decide if a joint checking account is right for you.
What is a joint checking account?
A joint checking account is a type of checking account that you share with one or more other people. Basically, joint checking accounts operate like individual checking accounts, but with multiple account holders who have equal access to the money.
Who can open a joint checking account?
Joint checking accounts are commonly used by …
- Parents and children
- Senior citizens and their heirs or caretakers
They might also make sense for roommates or business partners who want to split the bills.
While we couldn’t find any rules saying you must be related family members or unmarried couples who are in a long-term relationship, we wouldn’t recommend opening a joint checking account with someone you don’t know well, because trust is essential.
How do joint checking accounts work?
When you open a joint checking account, you and your co-account holder will have access to the same features that you’d find with an individual checking account.
You’ll each be able to …
- Make deposits
- Write checks
- Spend money at stores, shop online and take cash out from ATMs (if the account comes with debit cards)
- Transfer money to another account
- View the account activity
But there are also some differences you might notice.
- You’re both responsible for the money that goes into and out of the account.
- It only takes one person on the account to sign a check, but both your names will appear on it.
- Even though you both have full access to the account, you might each have separate online profiles with unique log-in information.
- You could potentially be charged more fees if the two of you use the account more than you would an individual account. For example, if your bank charges a per-check fee and you write more checks because there are two people on the account, it could cost you more. Some financial institutions also charge debit card fees. So the more debit cards they issue, the more your account will be charged. You could also face more ATM fees if you both withdraw money from out-of-network ATMs.
What are some advantages of a joint checking account?
A joint checking account can encourage trust and open communication in your relationship if you’re sharing the account with a spouse or romantic partner. Sharing an account with an older parent you’re caring for could also make it easier to manage their expenses — and it could simplify legal matters down the road, in the event of their death.
Joint checking and savings accounts can help you save for big financial goals like buying a home, paying for your wedding or planning a vacation. They’re also a good way to pay for shared household expenses like rent or mortgage payments, utilities and groceries. This can make it easier for married couples to budget and track their family’s finances.
And depending on what other accounts you both hold, sharing a checking account could double the amount of FDIC insurance coverage available to you — up to $500,000 instead of $250,000.
What are some disadvantages of a joint checking account?
If you don’t have solid trust in the person you’re opening a joint checking account with, your relationship could get pretty complicated.
A joint checking account might make you feel like your finances are constantly under a microscope. Because your co-account holder has full access to your account history, you won’t have as much privacy, autonomy or financial independence as you would with a regular checking account.
And if the two of you aren’t on the same page about how you want to spend money in the account, it could lead to disagreements. You might not appreciate having to ask permission to spend your own money. But on the other hand, you might not approve of how your partner is spending your hard-earned money.
In the worst-case scenario, your relationship and your finances could get ruined.
Not only is there nothing to stop the other person from spending all the money in the account, but if you break up or get divorced they could legally take the money out of the account without your permission when your relationship ends.
And you could end up on the hook for your partner’s financial mistakes. Let’s say they’re in debt and fall behind on payments, or get into a car accident. If they’re sued, the money could come out of your shared account.
How to open a joint checking account
Before you open a new joint checking account, you’ll need to gather some documents.
The requirements to open a joint account could vary from bank to bank, but at a minimum, each person who is listed on the account will likely need to provide certain personal information.
- Photo identification (like a driver’s license or passport)
- Home address
- Social Security number
- Date of birth
You might also be asked for contact information like your phone number or email address.
This is the same sort of information you’d be expected to provide to open a regular checking account. The biggest difference is the bank will need the information from every person listed on the account.
Some banks might also let you convert your individual checking account into a joint checking account by adding other account owners.
How to close a joint bank account
Whether you’re splitting up, not comfortable sharing your finances with your partner anymore, or you simply want to open a new account on your own, you might be looking to close your joint checking account.
Here’s what you can expect.
- If you’re closing your account at a branch — You could both be asked to bring your photo ID and fill out some paperwork.
- If you’re closing your account online — You could both be required to log into your account with your unique usernames and passwords and go through an automated account closure process separately.
- If you’re closing your account over the phone — You both might need to call customer service, answer identifying questions and give verbal consent to close the account.
- If you’re closing your account by mail — You might both need to fill out paperwork and send it to the bank.
Before you close a joint checking account, it’s important that you cancel any automatic payments and wait for outstanding checks and debit card transactions to clear. You’ll also want to redirect any direct deposits to your new account.
What’s next? Decide if a joint checking account is right for you.
Opening a joint checking account with someone else is a big step, so it’s important to take a moment to talk it over and make sure you’re on the same page.
Communication is key. We recommend you discuss your financial situation, including your shared goals and expectations about how you’ll each use the account.
Joint checking accounts may not be right for everyone. If you’re not comfortable sharing your finances with someone else, it’s healthy to admit that and open separate individual accounts by yourselves.