Few topics leave people in the personal finance community more divided than the subject of joint bank accounts. Do you keep your finances separate? Do you merge everything? Maybe it’s best to do a combination. Come with us as we take a deep dive into the joint bank account pros and cons.
Use the benefits and drawbacks to help you make the money moves that are right for you and your partner. After all, the goal isn't to duplicate another couple's exact money moves. Instead, you want to build the financial plan that's right for your family!
What is a Joint Bank Account?
Joint bank accounts are accounts that are shared between two individuals. Typically, these joint accounts will be savings accounts or checking accounts. That way, both people can use the account to cover expenses, pay bills, or save for certain financial goals.
A joint checking account works the same way as an individual checking account. You can write checks and make purchases with a debit card. Both people on the account should be able to access the funds with checks, a debit card, and by making bank deposits or withdrawals. Additionally, you can set up direct deposit for both people's paychecks if you choose.
A joint savings account works just like an individual savings account. This account is appropriate for setting money aside for short-term and medium-term goals. These accounts are FDIC-insured, which means they keep your money safe. They also often offer interest (get yourself a high-yield online account if you don't have one!). Both account holders can make deposits to and withdrawals from the account.
For our purposes, we’ll review joint account pros and cons for couples. But it’s worth noting that joint bank accounts can also be created for aging parents and their adult children or business partners.
In fact, joint accounts can be created for any two adults. However, it is crucial to ensure that the person you open a joint account with is someone you trust. According to the joint bank account rules, both account holders have total access to the account and all the funds in it.
Joint Bank Account Pros and Cons
Before you and your partner rush to open a joint bank account, it’s worth exploring the joint bank account pros and cons. Then, you want to consider your financial goals and the unique needs of your relationship.
Benefits to Joint Bank Accounts
There are so many benefits to joint bank accounts. From simplifying your finances to offering motivation to meet your financial goals faster, many couples feel that joint bank accounts are right for them.
Financial transparency can be difficult to achieve and maintain if you and your partner only have separate accounts. Of course, there are other ways to share your financial progress with each other.
But there’s no denying that joint accounts make financial transparency incredibly easy to achieve. Since both partners have access to joint accounts at all times, there’s no guessing at account balances or spending or saving.
By working from a shared account, you and your partner are on the same page. Literally! When you have money meetings, budget reviews or “budget parties“, the process is often streamlined.
While it’s certainly not impossible to have money dates if you and your partner only have separate accounts. It’s just going to add a few more steps to each budgeting review session.
In addition to streamlining the money date process, joint accounts make it easier to set goals and monitor your progress toward them.
You can quickly spot overspending, allowing you to both course correct mid-month instead of waiting for a surprise at your budget review. When you have a month where you both kick your savings into overdrive, you can celebrate sooner!
Combined finances result in higher account balances. This makes it easier to meet minimum balance requirements and other thresholds or activity requirements. Doing so can give you access to premium accounts and help you dodge maintenance and activity fees.
One old criticism of joint accounts was that it can be difficult to combine your money. Thankfully, there’s an app for that! In fact, there are many different fintech options like Zeta that will help you and your partner merge your money in a stress-free way.
Meet your goals sooner
Many couples say that their favorite part about joint accounts is the motivation that they offer. Your balance is higher than it is with separate accounts. Whether you’re chasing your first comma or looking to join the double comma club, a joint account can certainly ramp up the motivation.
Related Content: How We Became a Millionaire Couple in our 30's
Drawbacks to Joint Bank Accounts
There are many perks to joint bank accounts, but maybe you've heard someone argue that joint bank accounts are bad. We think that joint bank accounts can add a lot of value to a partnership, but it is worth knowing the drawbacks.
Joint accounts come with joint access and joint responsibility. If one person in your relationship is the saver and another is the spender, it’s important to remember that joint accounts grant equal access. Either individual can access the money at any time. If an account goes into overdraft, both people are responsible for the fees.
Joint accounts can also be seized by the government. If this is a second marriage for either partner and one of you owes spousal support or child support, a joint account can be taped to cover those expenses.
Lack of privacy
We would never advise you to hide anything significant from your partner. In fact, we believe financial transparency is one of the keys to making your relationship work.
However, it’s worth noting that it is much harder to hide birthday gifts and Valentine’s Day presents if you and your partner only use joint bank accounts.
Another consideration to make when weighing the pros and cons of joint bank accounts is where you and your partner are in life. A couple who is just starting out with a small net worth may have a much simpler time combining most or all of their finances.
However, if you and your partner set up multiple financial accounts and built a more significant net worth before you met, it might also make sense to keep some of those accounts separate.
Even with a prenup, it’s never fun to try to separate assets in the event of a breakup. But if you and your partner open a joint account before you’re married, it can be complicated to separate out your money if the relationship ends before you tie the knot.
While we certainly hope all the couples in our Marriage Kids and Money community are in healthy relationships, it is important that none of us turn a blind eye to the realities of financial abuse. When people combine every penny, it can make leaving an abusive situation virtually impossible.
Retirement account rules
Not every account should or even can be a joint account. For instance, an IRA or Roth IRA is an individual retirement account. While you can certainly identify a beneficiary, you cannot create a joint account. This is also true for workplace retirement accounts.
So while managing joint checking and savings accounts can certainly make things easier in your relationship, you are ultimately also likely to have to manage some separate accounts.
What do money pros say about joint bank accounts?
We've asked many different money and relationship experts their thoughts on combining finances. Some money experts like Rachel Cruze view joint accounts really favorably. In fact, Cruze says that a joint bank account signifies unity in a marriage.
Other relationship experts don’t take a firm stance. Instead, they try to address the source of money conflict in the first place. Virginia-based psychiatrist Dr. Laura Dabney works with couples to help them navigate difficult money conversations. She argues that joint accounts can be very helpful, especially in terms of transparency. But the bigger issue is teaching couples how to talk about money on both intellectual and emotional levels.
Adam Kol, a couples financial counselor, also believes that it is essential for couples to proactively address money issues. In fact, he believes that couples can stop money fights before they start. While he doesn’t necessarily prefer joint bank accounts, he says that it is key for couples to be realistic, set a budget together, and work toward their financial goals as a team. Joint bank accounts can certainly help facilitate some of this work!
Final Thoughts on Joint Bank Account Pros and Cons
Perhaps you want to use one joint account for all of your finances. Maybe you want to use a combination of separate and joint accounts. No matter how you commingle your money, see how Zeta might be able to help you and your partner get on the same page financially.
What are your thoughts on joint bank account pros and cons? Have you taken a look at Zeta?
Please let us know in the comments below.
Very valid points, but don’t see one of the most important reasons for separate accounts. Hubby and I have separate savings and checking accounts with a credit union. We have a joint checking account at a separate bank for our mortgage. A couple years ago he had checks from his credit union account stolen. He had to close all of his credit union accounts and reopen new ones. It was handled relatively quickly but still was a huge inconvenience as we had to go in person and there are not a lot of branches close by. Fortunately we still had access to the money in my accounts. Convinced us that we were right to continue to keep things separate.
Another great example! Thank you for sharing.
Diversification in accounts (and diversification in general) can be a smart habit to adopt.