Our pick for a joint savings account: American Express® High Yield Savings
- No monthly fee
- Competitive APY
- No minimum balance
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Joint bank accounts look just like regular checking and savings accounts, but there’s one caveat — multiple people have equal access to the money in the account. This can be great if each account owner agrees on how to use the money, but it can also present some challenges. Here’s a cheat sheet on joint bank accounts, what they are and how they work.
A joint account is any type of bank account that’s held in two 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 two people regardless of relationship, they’re generally used by family members, couples or business partners who trust each other.
Joint accounts are a great way to reach joint financial goals. Generally, joint accounts allow up to two account holders, but some providers allow for even more. Before opening a joint savings account, consider if it’s right for your financial situation.
There are two main types of joint bank accounts:
You can either set up the bank accounts where both people need to sign to withdraw or only one signature is necessary.
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 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.
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
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 five years and have decided to open a joint bank account. They have both changed their details with payroll so they can get their paychecks direct deposited 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 an ING DIRECT Orange Everyday 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.
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. First, you won’t have to pay the fees twice. Second, drawing up a budget and sticking to it might be easier when you both pool your money together. Also, 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 that the lines of communication are not only open but used often. If you have even the smallest doubt about your partner, then don’t open a joint bank account and give them full access to your money. You could create a joint account where you deposit a limited amount of funds, while keeping your primary salary account separate and in your name only.
It depends. Marriage represents the merging of two lives, which often means the combining of finances. This can simplify your financial picture and 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, keep the lines of communication open at all times. Discuss your saving and spending expectations beforehand, so you can minimize any potential disagreements that could arise.
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 a regular joint checking or savings account at any bank or credit union. Or, you could find one that’s targeted toward those under age 18.
If you want to save money for your child to use later on — say when they turn 18 or are in college — look into a custodial account. These are often referred to as UGMA or UTMA accounts. The parent controls the account while the child is a minor, but it becomes the child’s account once they turn 18. At that point, they can use the funds however they wish.Back to top
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 bank.
This table has tabs for joint savings, checking and CD accounts. Once you decide what type of account you’re after, sort the table by APYs, fees, minimum deposits and more. Pro-tip — view multiple accounts side-by-side by ticking the “Compare” box next to your favorites.
Opening a joint bank account with someone else looks a lot like opening a regular checking or savings account on your own.
Everyone listed on the account should have the following information on hand before you start the application process:
If you value your independence and financial privacy, you may chose to manage your own money rather than 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. Furthermore, some couples are hesitant to open a joint bank account because things can get complicated if they separate — 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 prayers. Things you could hear include: “don’t you trust me?”, “it means you don’t love me” or “what do you think I’m going to do? Run off with your money?” These are all a form of emotional blackmail, and there could be a reason they are so eager to share finances.
The other person’s financial status should be clear prior to opening an account together — you don’t want to take on someone else’s debt. This is especially true about joint bank accounts that offer credit. Your partner could rack up a huge amount of debt they can’t pay back and then you both are stuck with a poor credit history. Furthermore, you are just as responsible in the eyes of the law for paying back the loan as the person who actually spent the money.
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.Back to top
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 is logical to have a joint bank account.
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.
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.
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.
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’re better off avoiding a joint account.
Are the financial goals the same?
Confirm that you’re working toward the same financial goals. This includes short term goals such as 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.
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.
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:
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.
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 ‘play’ money. Also, check in regularly to make sure that you’re on track with your budget, and address anything that needs changing or that isn’t working.
No matter how hard we strive to avoid problems, it’s best that you 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.
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.
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