A joint checking account is not a righteous path to take once you become married to prove your devotion to the relationship. It goes way beyond this.
Many see opening a joint checking account as a progressive step, others have a different opinion. This topic is very controversial, but let’s first understand what it is.
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What is a Joint Checking Account?
A joint checking account is just like a normal bank account, but instead of a single-user it involves more than one user. Although it is popular among couples, it does not stop there.
Many parents open up joint bank accounts with their children to aid them in their banking experience, especially if they are under 18. Joint bank accounts can also be used to help your parents, and for a family to pool together their funds.
Nevertheless, the most common use for a joint bank account is for couples to pool together their money to pay joint expenses. These expenses could be monthly mortgage, rent, electricity bill, and food.
There is a lot of controversy about joint checking accounts. This is due to the account being accessible to more than one person, allowing each person to have equal owner’s rights.
Money is the number one cause for arguments between couples, and placing all their money together does not make it any better. It allows both parties to spend and splurge on whatever with each others’ money.
Joint checking accounts are not necessarily bad from the relationship perspective. but it’s more so about opening up as a couple. It is important to open up to each other and acknowledge the deeper parts than just surface level sharing.
Especially with marriages, all the money in the joint account belongs to both of you because everything is shared. You can use the money as much as you would like just as much as your partner can.
This is essential because shared expenses can be easily paid off without dividing it into two, and both partners are contributing. But there are serious repercussions too.
PRO TIP: In case of live-in relationships, it is advised not to go for a joint checking account. No laws protect unmarried couples’ assets. It is better to link accounts as a beneficiary for easy money transfer
For example, if you move into your boyfriend or girlfriend’s house and pay half the mortgage for 4 years and then you split up, you have nothing except the items you moved in with while they have equity in their home.
Pros & Cons of a Joint Checking Account
- Gives partners equal ownership, with liberty to withdraw and deposit funds without others’ consent or approval
- A checking account owned by two people doubles up insured amount by FDIC and NCUA to $500,000
- Finances are simplified, making shared expenses easier to pay
- While one owner can close the account with the other person’s consent, a joint account co-owner cannot remove partner(s) without their approval.
- Joint liability – if your partner links recurring bills to the account then there may be chances of overdraft that you are not protected from
- May not be able to receive benefits, grants, and loans – many college students have been denied financial aid due to the joint account with their parent or guardian
- Debt can be collected against the joint account and you could lose your share of the money if your partner doesn’t pay down debt
- If a co-owner (other than your spouse) withdraws more than $14,000 every year from the joint account, it will be treated as a gift by the IRS and will be subject to Gift Tax
- In the case of divorce (or split-up), the joint account will still be active and if your ex-partner adds a new co-owner they will be able to access all they money as well
Tips for a Healthy Joint Account Relationship
It is important to not allow money to get in between joint account co-owners. Keep these things in mind:
Use joint checking accounts only for shared expenses and collected savings. No individual credit card payments, beauty subscriptions, or things of that nature. It is a mutual account and should be used for things that all parties need to contribute to.
Decide your roles and work on it. If one person has decided that they will balance books for the month, the other should keep track of all shared expenses that goes from the account.
Be honest. Honesty is the best way to make things work. Be open and up front, even if you need money from the joint account for personal reasons, speak with your partner(s) about it before just doing it.
Pick and Choose
Joint checking accounts are a part of a healthy relationship, but you might not want your paycheck coming into your joint account.
Most experts agree that it is best to be in a committed relationship before pursuing a joint account. Your personal checking account should be the primary destination for your income and then the designated shares can be transferred from there.
In going this route, you can avoid the appearance of not trusting your partner, even if you don’t. Prior to getting involved with a joint account, decide on a certain amount each of you should put into it to pay bills.
You can also get a joint savings account to save for big purchases like a house, car, or vacation.
Your relationship with your spouse is the most important thing in the world. Don’t let a bank account break what the two of you have. Discuss with your partner about any qualms you may be having.
A joint checking account is very useful and can help in many ways. If you’re worried about anything happening to your money, then you might not want to place it all to be shared.
Joint checking accounts have good things and bad things about it. It can be helpful in paying shared expenses, but you could also lose a lot of money if your partner isn’t careful. Decide what is right for you and your partner(s) in your situation and go from there. Be sure it is what you really want after evaluating your relationship.
For more information on banking, be sure to check out more of our bank guides!