Joint Bank Accounts: How and When They Work

Tony ArmstrongOctober 9, 2020
On a similar note...
On a similar note...

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Joint bank accounts are checking accounts that belong to multiple people, each of whom can contribute to and use the money in the account. Such accounts are a good fit for couples, parents and their teenagers, and adults assisting their aging parents.

On paper — and in an ideal world — joint accounts provide easy collaboration for spending and saving. But realistically, they require more self-awareness and trust than the typical bank account.

Here's a closer look at what to consider before opening a joint account.

» Skip ahead to compare some solid checking accounts.

Is a joint bank account a good idea?

A joint bank account can be a good idea as long as you and the other account holder have a strong, trusting relationship. Whether you’re planning on sharing an account with a child, significant other or aging parent, communication is essential. That may mean having difficult discussions about spending and saving habits. As uncomfortable as it may be, initiating these types of conversations can prevent even bigger headaches later.

“It’s important to lay out expectations with the other account holder,” says Carrie Houchins-Witt, a financial advisor. “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.”

Pros of joint bank accounts

  • Parents can monitor a child’s spending habits and can quickly transfer money 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 aging parents manage their finances.

  • A joint account can be set up so that if a parent dies, an adult child has immediate access to funds in the account, avoiding a potentially lengthy legal process.

  • Each account holder is insured up to $250,000 by FDIC or NCUA insurance coverage at a bank or credit union.

Cons of joint bank accounts

  • A child may spend too freely and become overly reliant on mom or dad refilling the account.

  • Neither partner can control spending from the account, so one person could drain it.

  • One partner could overdraw the account, causing fees to be charged that both would be responsible for covering.

  • If one holder lets debts go unpaid, creditors can go after money in the joint account.

  • Both holders can see transactions in the account, which can present privacy issues.

» Looking for savings options too? See NerdWallet's best savings accounts

Know when to save (and spend)

NerdWallet tracks your spending and makes it easy to see when to cut back and when you can spend.

How to open a joint account

Setting up a joint checking account is much like opening a personal one. Here's what the process will probably look like:

  • Select the "joint account" option during the application process with your bank.

  • Provide the bank or credit union with personal information for all account holders, such as addresses, dates of birth and Social Security numbers.

If you’re opening a joint account with a significant other, don’t close your individual account, at least not right away. You may want to have money of your own for personal expenses or for gifts and surprises.

Compare these checking accounts for a few solid options.

NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Monthly Fee

$12.00

Waived with direct deposit or $1,500 minimum balance

Monthly Fee

$0

Monthly Fee

$0

APY

N/A

APY

0.10%

With $0 minimum balance

APY

0.10%

With $0 minimum balance

Bonus

$200

Requirements to qualify

Bonus

N/A

Bonus

N/A

Specialty accounts could work, too

If you have a teenager, you might also consider opening a teen checking account. These accounts can have lower fees and may place daily restrictions on how much cash your child can withdraw from an ATM. However, you may have to open an account at a bank or credit union other than your own, which could make it more difficult to transfer money quickly and cheaply. See our picks for top checking accounts for teens.

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