There are many reasons why someone would want to open a joint checking account, but let’s first discuss what a joint checking account is. It is the same as a regular checking account, except that two people are the account holders, and both are under the FDIC’s protection.
One reason to open a shared bank account might be that you recently got married and want to blend your financial assets. This is usually an action married couples take to save toward shared financial goals like a new home or an exciting vacation. Additionally, it helps ease the process of paying shared bills like rent or mortgage, utilities, groceries, etc., instead of using individual accounts and having to pay your significant other back.
Joint account holders must communicate and set expectations about money management, including deposits and withdrawals.
Joint checking accounts are significant in times of crisis. If you only have separate accounts, the individual whose name is not on the account wouldn’t be able to access the money in that account if the account holder was ill or unable to do so themselves. However, there is no shame in having both joint and separate accounts. Sometimes it is good to have a backup or for personal finances and entertainment.
Those in long-term relationships aren’t the only people who can benefit from a shared bank account. Other people who might have a reason for opening a joint account are parents who want to monitor their teenager’s spending habits or caregivers of older adults who need easy access to funds to pay for their long-term care. If you are launching a new business venture, you and your partner may even want to open a shared account for both parties to keep detailed records of expenses.
There are other account options available, like having one partner sign onto an existing account as a co-owner, where both partners will be able to withdraw and contribute money without the other’s permission. Then there are linked accounts, where each partner can transfer money to and from each other’s accounts. However, this feature is only available when both accounts are at the same financial institution.
Now, let’s go over how to open a joint checking account.
Steps to Open a Joint Bank Account
This section will provide details on items you need to provide, the information you should know from your bank, and the steps to opening a joint bank account, although these may differ slightly from bank to bank.
What You Will Need
Personal identification items like your Social Security card, driver’s license or state ID, credit score, date of birth, and mailing address are likely required by your bank when opening a new account.
What You Should Find Out
Before opening a new joint account, there is some information you should get from your bank regarding the account. Here are a few questions to ask when applying:
- What are the minimum balance requirements?
- Are there any monthly fees or maintenance fees tied to the account?
- How hefty are the overdraft fees? Is there a grace period, and can we appeal to get the money back?
If you are opening a joint savings account instead of a joint checking account, it is important to know the annual percentage yield (APY), so you have a clear picture of what your money could earn.
After setting up your account, you can sign up for online banking to manage and monitor your account more efficiently. Choose one account owner – if not both of you – to get banking alerts and decide if you will have separate or shared online profiles.
Money management and communication are crucial to having a successful financial life, and a joint checking account helps bridge the gap between two individuals’ finances. If you need more help demystifying the process of opening a shared bank account (and any legal concerns it may present), Royal Oak Financial Group is happy to help. Contact us today to schedule a consultation with a member of our legal team.
