How to Open a Joint Bank Account

Is a joint bank account right for you? Learn why you might want a joint account, how to open one, and the associated risks before you head to the bank.

Joint bank accounts offer mutual ownership of a single bank account.

This can make tracking expenses easy.

But is it worth the added risk?

Find out the pros and cons of a joint bank account, and how to open one, in this guide.

What is a Joint Bank Account?

A joint bank account is an account that is owned by two or more people.

Typically, both owners have equal ability to contribute money into the account, spend funds, view transaction history, and write checks.

You can use joint bank accounts for a variety of reasons. Think business partnerships, streamlining finances with a spouse, or helping a family member manage their money.

There are several different types of joint bank account (more on this later).

How to Open a Joint Bank Account

Opening a joint bank account is simple. Follow these steps and you can have a joint bank account opened and funded within a day, or even sooner.

1. First, agree on how you'll use your joint account
   Communication is key with joint bank accounts. Have a conversation to decide what expenses you will pay for using this account, how much money you will each contribute on a monthly basis, and what your long-term goals are.

2. Choose who to bank with
   Pick the bank or credit union where you want to open a joint account based on these factors:
   
   • Location: While less important during the digital banking era, both parties should still have ATM access.
     
   • Fees: Compare the full fee schedule of several institutions, being especially mindful of monthly service fees, overdraft fees, and ATM fees.
     
   • Minimum Balance Requirements: Make sure that you can meet the minimum opening deposit and minimum monthly balance requirements of the bank or credit union you choose.
     
   • APY: The best individual and joint bank accounts will pay you a monthly interest payment (or dividend, in the case of credit unions).

3. Gather the necessary documents
   Opening a joint bank account is very similar to opening a regular bank account. You will need to supply documentation to the bank or credit union to verify your identity and allow the bank to check your banking history:
   
   • Your Social Security number (SSN) or taxpayer's identification number
     
   • A photo ID, such as a state-issued driver's license, state-issued ID card, or government passport
     
   • Personal info including your name, mailing address, phone number, and email address

4. Apply for the joint bank account
   Visit a bank branch, call, or visit the banking institution's website to apply online for your new joint bank account.

5. Deposit money into your account
   Decide together how much money you want to deposit into your new account upon opening it. If there is a minimum opening deposit, you must deposit at least that much.

   You can deposit funds using cash or check at a bank branch, by transferring money electronically, or by using a mobile check deposit feature.

The Pros and Cons of a Joint Bank Account

Joint bank accounts require trust and communication between the people opening the account, whether you're marriage partners, business partners, or parent and child.

While joint bank accounts can simplify expenses, there is risk involved. Review these pros and cons before creating an account.

Pros

• Easily pay for shared expenses like your monthly mortgage, rent, utilities, etc., without the need to split the bill
  
• Collaborate on savings goals like a down payment for a home
  
• Teach children about banking responsibly while monitoring their activity
  
• $250,000 FDIC or NCUA insurance per account holder ($500,000 total for two account owners)

Cons

• Shared liability means if one person overdraws the account you're both on the hook to pay overdraft fees
  
• Your partner's spending is out of your control
  
• Both parties can view all account activity, so you forfeit your financial privacy when using this account
  
• Creditors and debt collectors can collect funds from a joint account if either party has unpaid debts

Types of Joint Bank Accounts

Let's take a look at the different types of joint bank accounts to make sure you open the right one for your situation.

Joint Tenants with Right of Survivorship Account
This is the most common type of joint bank account and is especially popular with couples.

Joint Tenants with Right of Survivorship accounts provide equal ownership and access rights to both parties and 100% of the balance passes to the surviving owner if the other passes away.

Debt collectors can access funds, regardless of which owner owes the debt or who deposited funds into the account.

These accounts are not subject to probate.

Tenants by the Entirety Account
This type of account is only available to married couples, domestic partners, and partners of civil union.

With a Tenants by the Entirety account, both owners must sign off on every transaction and debt collectors can only access funds in the account with the permission of both owners.

This type of account is not subject to probate.

Convenience Account
Convenience accounts are commonly used to manage the money of a dependent relative and are used to pay for their bills and day-to-day expenses. Upon the death of the owner, funds are allocated according to the owner's will.

This type of account is subject to probate.

Joint Tenants in Common Account
Common with business partners (but open to anyone), the ownership and access rights for a Joint Tenants in Common account can be divided equally, or not, depending on the owners' preferences.

Debt collectors can access the funds, regardless of who owes the debt, and these accounts are subject to probate.

Joint Payable-on-Death Account
These accounts allow two equal owners to agree upon a beneficiary. Upon the death of one owner, the surviving owner acquires 100% of the account. After the passing of both owners, the balance is transferred to the previously agreed upon beneficiary.

These accounts are subject to probate and debt collectors can access the funds.

How to Use a Joint Bank Account

Joint bank accounts are best used to pay for shared expenses. These include rent or mortgage payments, utilities, streaming services, groceries, dining, etc.

It is recommended that you maintain a personal bank account for splurge spending, to pay for surprises such as gifts for the other person, and as a financial fallback plan in the event that your relationship with the other owner ends poorly or they prove to be financially unreliable.

FAQs about Joint Bank Accounts

Joint bank accounts simplify finances but they are unfamiliar territory to many people. Here are some of the most common questions people want to know about joint bank accounts.

Should married couples have joint bank accounts?

According to a 2019 survey conducted by TD Bank, a significant majority (57%) of married couples share at least one bank account. ^[1]

But ultimately, this decision is completely up to you and your partner.

A joint bank account can simplify your shared finances and make managing your money easier. However, there are risks associated with joint accounts as well, such as privacy loss and joint responsibility for debt.

Who owns the money in a joint bank account?

In most cases, both individuals retain ownership of the account and can deposit and withdraw money. However, keep in mind that ownership, responsibility, and access rights can vary by account type and by the bank.

How do you close a joint bank account?

If you are closing an account due to an impending divorce, it is highly recommended that you wait for legal advice before closing any joint accounts to avoid possible penalties. ^[2]

If you wish to close your account, simply follow these steps:

1. Cancel all your automated payments
   
2. Switch your direct deposit
   
3. Ensure all pending payments have cleared
   
4. Withdraw and divide your resources and transfer them into your personal accounts
   
5. Contact your bank to request the closure of your account

Can one person close a joint bank account?

The process for closing your account depends on the account type and your banking institution.

Check with your bank or credit union to determine if both parties need to sign off on the account closure or if only one owner is required.

The Best Joint Bank Account Options 2021

Does a joint bank account seem right for you? Compare the top accounts currently available below.

Citi Priority Account - Earn up to $2,000 Cash Bonus

Learn More

Expires 7/23/2023

• Earn up to $2,000 cash bonus when you open a new eligible Citi Priority Checking Account with required activities
• Within 20 days of opening, deposit the minimum amount of new-to-Citibank funds.
• Maintain a minimum balance for 60 consecutive calendar days from the 21st day.
• If your balance falls to a lower tier at any point during the maintenance period, the bonus changes.
• Bonus will be paid within 30 days after you successfully complete all required activities.

Member FDIC

BMO Harris Smart Advantage™ Account - $300 Cash Bonus

Open a new BMO Harris Smart Advantage™ Account online and get a $300 cash bonus when you have a total of at least $4,000 in qualifying direct deposits within the first 90 days of account opening. Offer is limited to one per customer and is not available for existing BMO Harris personal checking customers (including signers on joint accounts) or those who have closed a BMO Harris personal checking account within the past 12 months. Conditions apply.

Get Deal

Expires 9/15/2023

Member FDIC

U.S. Bank Smartly® Checking and Standard Savings - Up to $400 Bonus

Earn up to $400 when you open a new U.S. Bank Smartly® Checking account and a Standard Savings account and complete qualifying activities. Subject to certain terms and limitations. Offer valid through June 20, 2023. Member FDIC.

Complete these steps within 90 days of opening your new Bank Smartly checking account online to earn $300:

• Enroll in online banking or the U.S. Bank Mobile App
• Complete two or more direct deposits of $5,000 or more
• Complete 10 or more debit card purchases totaling at least $100

Earn $100 when you open a new Standard Savings account, by June 20, 2023, complete deposit(s) of $15,000 or more by July 13, 2023 and maintain a total account balance of $15,000 until October 13, 2023.

Applicant must reside in AZ, AR, CA, CO, ID, IL, IN, IA, KS, KY, MN, MO, MT, NE, NV, NM, NC, ND, OH, OR, SD, TN, UT, WA, WI, WY to be eligible for Checking account

Learn More

Expires 6/20/2023

Member FDIC

BMO Harris Smart Money™ Account - $300 Cash Bonus

Open a new BMO Harris Smart Money™ Account online and get a $300 cash bonus when you have a total of at least $4,000 in qualifying direct deposits within the first 90 days of account opening. Offer is limited to one per customer and is not available for existing BMO Harris personal checking customers (including signers on joint accounts) or those who have closed a BMO Harris personal checking account within the past 12 months. Conditions apply.

Get Deal

Expires 9/15/2023

Member FDIC

BMO Harris Premier™ Account - $500 Cash Bonus

Open a new BMO Harris Premier™ Account and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Offer is limited to one per customer and is not available for existing BMO Harris personal checking customers (including signers on joint accounts) or those who have closed a BMO Harris personal checking account within the past 12 months. Conditions apply.

Get Deal

Expires 9/15/2023

The Bottom Line

Joint bank accounts can be a great way to symbolize a financial union with your spouse, teach your children about money management, or help an aging relative meet their financial obligations.

Be mindful of the risks and do your homework to select the right type of account and banking institution for your particular needs.

References