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Opening a joint account
Joint accounts are best for people who are working towards a similar financial goal together.
A joint account can be either a chequing or a savings account that is held in 2 or more names.
These types of accounts are generally used by family members, couples or business partners who trust each other. This is because anyone who’s on the account can use the money in any way they see fit.
Popular joint accounts in Canada
What is a joint bank account?
A joint account is any type of bank account that’s held in 2 or more names. Everyone named on the account has equal access to the money and can use the funds however they see fit. Although these accounts can be opened by any 2 people regardless of relationship, they’re generally used by family members, couples or business partners who trust each other.
Is it best to have separate or joint savings accounts?
Joint accounts are a great way to reach joint financial goals. Generally, joint accounts allow up to 2 account holders, but some providers allow for even more. Before opening a joint savings account, consider if it’s right for your financial situation.
Joint accounts can be long term or temporary. An example of a long-term account would be a couple opening an account that they share to save for a house or home improvements. A temporary account would be an arrangement to help 2 people achieve a short-term financial goal like a vacation.
Types of joint bank accounts
There are 2 main types of joint bank accounts:
- Rights of survivorship accounts. This type of joint bank account is most commonly used by couples and close family members. If one account owner dies, 100% of the funds go to the surviving account owners and the funds don’t pass through probate.
- Convenience accounts. This type of joint bank account is most commonly used by the elderly or incapacitated individuals who need someone to act on their behalf. There aren’t any survivorship rights, so the money is divvied up according to the estate plan once the account owner dies.
How to set up a joint bank account
You can either set up the bank accounts where both people need to sign to withdraw or only one signature is necessary.
Both parties required to sign
If you would like peace of mind, this is a good option to ensure you know what is happening with the money at all times. This type of joint account requires both account holders to sign for the approval of a transaction for it to be performed. This is popular with business accounts.
However, you have to decide whether the added level of security is worth it and is actually necessary. If you trust your partner implicitly, this may not be the best option as it can make the account difficult to access and less convenient. If you’re away and your partner needs money urgently, a withdrawal or payment can’t be made without your signature.
Either party can sign
For a joint account where either party can sign, anyone named on the account can perform a transaction on their own, without the knowledge or approval of the other person. But the level of security is lower because anyone on the account can spend money without you knowing. But if you trust one another, it is certainly much easier for day-to-day living.Back to top
Who are joint bank accounts suitable for?
A joint bank account requires trust. If you’re thinking of opening an account with a roommate or someone you’re dating, think about the future and if you have similar goals. But also consider the past – do they have a history of bad financial choices?
Steve and Melissa have been together 5 years and have decided to open a joint bank account. They have both changed their details with payroll so they can get their pay cheques deposited directly into the account. Steve travels a lot for work, so he's often away. The plan is that Melissa will handle any bill payments when Steve can't be there.
They decide to open a joint account online. Steve and Melissa both make small purchases like coffee or drinks at the bar. Neither minds the other spending as long as all the bills are paid and that they're still saving their agreed amount each month.
* This is a fictional, but realistic, example.
Joint bank accounts for partners
If you’re in a long-term relationship and you trust your significant other, a joint bank account can be an excellent tool to help you manage your money effectively and achieve financial goals together in a few ways:
- You won’t have to pay bank fees twice.
- Drawing up a budget and sticking to it might be easier when you both pool your money together.
- If one of you has to be away for an extended time frame, the other person can take care of all the financial aspects.
The key to a successful joint bank account is trust. It’s important that both account holders establish clear ground rules and have open lines of communication. If you have even the smallest doubt about your partner, then don’t give them full access to your money with a joint bank account. Instead, you could keep your primary salary account separate, but use a joint account for a limited amount of shared funds.
Joint bank accounts for married couples
Marriage represents the merging of 2 lives, which often means combining finances to make it easier to pay bills and save up for financial goals. But just because you tie the knot doesn’t mean you have to open a joint bank account. If you and your spouse aren’t on the same page financially, you may be better off keeping your accounts separate and opening one shared account where you deposit money for bills and other routine payments.
If you decide to open a joint bank account with your spouse, make sure you and your spouse communicate frequently. Minimize any potential disagreements by discussing your saving and spending expectations beforehand.
Joint bank accounts with a child
Opening a joint bank account with your child can be a great way to monitor their account activity and help them develop basic money management skills. If you want your child to have access to their money now, you can open up an account that’s targeted toward those under age 18.Back to top
How do I compare joint accounts?
As with any bank account, you’ll want to find a bank that offers joint accounts with as few fees as possible. In fact, it’s preferable to find one that won’t charge you transaction fees, will give you easy access to your funds and will offer a reasonably good interest rate on the funds you have in your account.
The majority of banks will let you fill out your application online, saving you time and the work of coordinating a face-to-face meeting with the bank.
Compare joint bank accounts in Canada
While some bank accounts are specifically branded as joint accounts, many regular chequing and savings accounts allow you to add one or more people as additional account holders. Some banks require you to add a joint account holder at the time of application, while others will allow you to add (and remove) account holders as you please.
What are the pros and cons of opening a joint bank account?
- Save together. Good for couples that have joint financial goals and share spending and saving habits.
- Fewer fees. Save on fees with only 1 bank account.
- Full transparency. Since you’re both on the account, you’re always able to see how and where the other is spending.
- Easier to pay and schedule bills. With all the money in one place, it’s a lot easier for couples to manage personal finances and bills.
- Complete access to all money. If you opt for a joint bank account where both of you can withdraw money freely, be sure to discuss large or unnecessary purchases.
- Splitting up. If there’s a breakup, both of you have access to the account. You may hope you could amicably split the funds, but in the case of a dispute, court can be a long and arduous process.
- Complete transparency. This is a double-edged sword; while you have complete transparency, you may lose some of your financial privacy.
How to open a joint bank account
Opening a joint bank account with someone else looks a lot like opening a regular chequing or savings account on your own.
- Shop around for bank accounts until you find one that suits your needs and allows multiple account holders.
- Apply for the account either online, by phone or in person at a local branch. Be sure to check the box that states you’re opening a joint account.
- Verify your identity as well as the identity of anyone else on the account.
- Fund the account by making your initial deposit.
- Start using your account by setting up direct deposits, scheduling automatic savings transfers, paying bills and more.
Everyone listed on the account should have the following information on hand before you start the application process:
- Full name
- Canadian residential address
- Date of birth
- Social Insurance Number (SIN)
- Government-issued photo ID
Joint bank accounts can also lead to trouble…what can go wrong?
If you value your independence and financial privacy, you may choose to manage your own money rather than open a joint account.
It’s critical that partners and couples are completely open about their spending habits. If one person is committed to saving, and the other can’t keep their spending under control, there are bound to be issues. Some couples are also hesitant to open a joint bank account because things can get complicated if they separate – but it’s important to agree on a strategy for this prior to opening a joint account.
You need to be careful if someone is trying to push you into opening a joint bank account. Someone who might have money problems could see you as the answer to their problems and might try to use emotionally persuasive language to convince you to grant them access to your funds.
Are joint account holders responsible for each other’s debts?
Any debt linked to the joint account is the responsibility of both account holders. In most cases, either account holder is free to attach a debt to the account without the other knowing – and then you’re both stuck with repayment and poor credit if the debt proves difficult to get rid of.
Some other important implications for joint account debts include the following:
- If one account holder misses debt repayments or defaults altogether, then both account holders’ credit scores will go down.
- Both account holders are responsible for overdrawn funds, regardless of who took the balance into the overdraft.
- If one account holder goes bankrupt or has outstanding debt linked to the account, creditors could claim funds from the account to pay back the debt.
Joint bank accounts after divorce
If you close out your joint account or withdraw a large sum of money during a divorce, a judge could require you to return the funds. That’s why most lawyers recommend not doing anything drastic with joint accounts until the divorce is final and a plan has been made.
Joint accounts are a mess to separate after divorce. Each spouse is typically entitled to 50% of the account balance, but this isn’t always the case. If one person has bank statements proving they entered the marriage with more money, they could leave with more than half of the funds.
The 7 questions to ask each other before opening a joint account
1. Do you pool your expenses together?
Do you both use the same budget and consider your costs as shared expenses rather than individual expenses? If all you have is shared expenses, then it may be logical to have a joint bank account.
2. Do you both spend money the same way?
Are you both financially responsible? Will one strive to save while the other empties the account? If this is the case, you’re better off either keeping things separate or opening a joint account where both of you have to sign for each transaction.
3. Are you comfortable with the idea of opening a joint bank account?
You might save a few dollars on fees, but if you aren’t really all that happy about the idea, then don’t do it. You can always check out our guide to fee-free chequing accounts to find options for both of you that can help you save on fees while keeping your finances separate.
4. Is the trust there?
Believing your partner will be financially responsible at all times, even if things get tough, is essential. If the trust isn’t there, you are better off keeping things separate.
5. Are the lines of communication open?
Is talking about money issues uncomfortable? If you have communication problems surrounding money and you feel you need to hold back your opinion, then you might want to consider avoiding a joint account.
6. Are the financial goals the same?
Confirm that you’re working toward the same financial goals. This includes short-term goals such as financing an overseas trip and long-term goals like buying a house. If you’re not on the same page, a joint account will be less likely to work.
7. What is the goal of opening a joint bank account?
Figure out exactly why you should open an account and see if there are other ways to get there. If you want to save money on fees, for example, consider whether the few dollars are really worth the worry. You could simply shop around to find an account with lower fees instead.
4 tips for couples who want to open a joint account
1. Communicate clearly
If you’ve decided to take the plunge and open a joint bank account with your partner, make sure you talk about these important issues in advance:
- How will spending be managed?
- How will bills be managed? How much needs to be paid and who’s responsible?
- Are there financial issues that need to be dealt with prior to opening a joint account?
- How will you handle financial obligations from the past like child support, loans or legal fees?
- If one party earns a higher salary, will they be allowed to spend more?
Then, you’ll have to decide which accounts will be set up as joint accounts and which will remain separate. For example, some couples choose to pool their savings in a joint account while their everyday accounts remain separate. Other couples opt to separate ownership of property, such as their homes, especially when it was purchased before the relationship began.
2. Work out a budget
To make life easier, put together a monthly budget. Write down all your expenditures for a week, which allows you to see where the money is going and if there are areas you can cut back to save some money. Then, decide on a budget. The key is not to be too strict and make sure to give yourselves some money to spend just for fun. Also, check in regularly to make sure that you’re on track with your budget and to address anything that needs changing or that isn’t working.
3. Maintain steady savings
No matter how hard we strive to avoid problems, it’s best to make a plan for emergencies. This could be anything from unemployment or illness to an accident or car issues. It’s essential to have some money set aside. A savings account could be useful in such situations as well as ensuring that you have available credit.
4. Remember your financial goals
By establishing your joint financial goals, you’ll find it a lot easier to save when you’re both working towards the same objective. Check in periodically to be sure you’re both on the right track.
Joint bank accounts can be a good idea but only if you and your partner have the same financial goals and spending habits. If you’re simply opening the account for the sake of convenience, remember that there are other options that can provide the same level of convenience without the risk. However, if the trust is there, a joint bank account can make life easier, especially when you’re working together to achieve certain financial goals.
To learn more about your account options and to find the best type of account for you, check out our detailed guide to bank accounts and start getting financially stronger today.
Common questions about joint accounts
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