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When to Consider Opening a Joint Checking Account

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Joint checking accounts can be ideal for couples, parents and their teenagers, and adults looking after their aging moms and dads. They function just like personal checking accounts, but belong to both people on the account. Both can contribute to and use the funds it holds. This arrangement requires a great deal of trust between the participants, so opening one needs careful consideration.

Joint checking accounts have their pros and cons. If you think one is right for you, setting it up is straightforward.

Pros

  • Parents can monitor a child’s spending habits and can quickly transfer funds to a joint account when necessary.
  • Couples can use cash in a joint account to cover shared expenses such as rent, utilities and food.
  • Adult children can help manage parental finances should their elders become infirm.
  • If a parent dies, an adult child has immediate access to funds in the account, avoiding a potentially lengthy legal process.

Cons

  • A child may spend too freely and become overly reliant on Mom or Dad refilling the account.
  • Spending from the account can’t be controlled by either partner, so one could drain it.
  • A partner could overdraw the account, generating fees both may have to cover.
  • If one holder lets debts go unpaid, creditors can pursue money in the account for settlements.
  • Both holders can see transactions in the account, which can present privacy issues.

Opening an account

Setting up a joint checking account is much like opening a personal one. You must provide the financial institution with required personal information for both participants, such as addresses, dates of birth and Social Security numbers.

The most challenging step may be deciding whether to open a shared account in the first place. Before you fill out any forms, have a frank conversation with your prospective account co-owner. This talk can help you avoid disagreements and confusion later.

“It’s important to lay out expectations with the other account holder,” says Carrie Houchins Witt, a financial advisor in Coralville, Iowa. “If your teenager hasn’t quite grasped the concepts of saving and spending and personal responsibility, be careful about putting money in the account and expecting them to budget properly without your guidance.”

If you’re opening a joint account with a significant other, don’t close your personal account, at least not right away. You may want to have funds of your own for personal expenses, such as clothes and meals out with friends.

The bottom line

In the right situation, opening a joint checking account can make a lot of sense. But doing so requires quite a bit of maintenance. Whether you’re planning on sharing one with a child, significant other, or aging parent, be sure to keep channels of communication open and deal with any issues as they arise.

That may mean having difficult discussions about spending and saving habits, but initiating these types of conversations can help prevent even bigger headaches down the road.

Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email: tony@nerdwallet.com. Twitter:@tonystrongarm

Updated Aug. 14, 2015.


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  • http://www.spwca.co.uk/ Jack – CA London

    Interesting read from a credible source. Yes, joint checking account certainly has pros and cons in all relationships.

  • Gabriel Thompson

    After reading a lot around the internet, I’m thinking at least for my situation, I’m not going to go down the joint account road. My wife and I already have an agreement where I pay all the rent and bills (in this case, I make much more than she does) and she pays me an agreed amount for her share each month which accomplishes all the advantages of a marital joint account listed above. As for travel and other shared purchases, she has the travel rewards credit card and I pay her an agreed % split (i.e. 60/40, somewhat proportional to our incomes) which helps her build up her credit. I have also setup my individual account so that she has access in case of death or emergency. The only downside is that we don’t get to see what each other are spending our daily-use money on……..and I’d suggest that if that’s the main reason you are going for a joint account (ps – the women know this), then there are other trust issues. To semi-resolve this, guys (or girls) should just ensure their partner is setting up some kind of automatic savings transaction for their future (retirement, education, etc.) and stop caring about how they spend the rest of their money. Just my two cents.