Talking about money and managing finances can lead to stress in even the best relationship. Perhaps you and your partner are considering opening a joint bank account but worry it may get too complicated. Or you may be leaning toward separate accounts but worry that will make managing your joint expenses difficult. Understanding what a joint bank account is and how it works can help you make a smarter decision for your finances and relationship.
What is a joint account?
A joint account functions just like a standard banking account, except that two or more people own the account. You can use a joint account to pool your money together. This is helpful with both saving—you can save toward shared goals, such as a new home or vacation—and spending. With a joint account, you and your partner can pay shared household expenses, such as mortgage, car payments, utilities and groceries, from the same place.
Withdrawing cash, writing checks and making online payments from one account also allows both of you to see how money is being spent. That can help you budget together as a couple. With account activity visible to both of you, there may be less temptation to splurge on discretionary items or make purchases in secret.
Opening a joint account can also help you take advantages of features that may not be available to you as an individual account holder. That’s because pooling your money may help you meet the minimum balance requirements that qualify you for features like waived maintenance fees, a higher interest rate or rewards.
If you decide to go in this direction, opening a joint account is a similar process to opening an individual account. You and your partner will both need to provide information and identification. You may also be able to add one partner to another’s existing account. As co-owners, both of you will be able to access and withdraw funds without the other’s permission, and each of you will be able to talk to the bank about the account without the consent of the other.
After you set up your account, you can decide how to manage and monitor it, including whether you want to sign up for online banking, which of you (or both) will receive account alerts, and if you’ll have shared or individual online banking profiles.
Before you open a joint account, consider ...
Some couples feel more comfortable keeping their individual accounts. Keeping your separate accounts as they are grants each person the freedom to control the money he or she earns. This is helpful if partners have different spending habits; being able to manage money in one’s own way gives each person a stronger feeling of financial ownership.
Separate accounts can also be helpful if you and your partner are in different places financially. For example, if one partner is carrying a lot of debt or has mismanaged money in the past, a degree of separation can provide a sense of security for the other person—at least until the debt is paid off. (Third parties may take funds from a joint account to cover debt owed by one of the individuals.)
The challenge with separate accounts is how to manage shared expenses. Determining who pays for what can be a point of stress for couples. If you decide to maintain separate accounts, you and your partner should have clarity around this issue, and make sure each of you is comfortable with the arrangement.
Linked accounts for couples
For some couples, linked accounts offer a happy middle ground between joint and individual options. A linked account is an account linked to another at the same financial institution so that funds can be transferred between them electronically. For example, many people link their checking and savings account so that funds can be easily transferred electronically between them. You can use the same feature to help you and your partner.
You might consider opening a joint account but keeping your separate accounts, as well. If so, talk to your bank about linking both of your individual accounts to the joint account. Linking lets couples maintain independent control of their checking accounts while sharing a joint account from which they can pay bills, manage household expenses, contribute savings, and handle other daily financial responsibilities. This way, you have a shared space to deposit money for mutual expenses or to save for future goals.
The reverse is possible, as well. For example, if your company offers direct deposit, you can have your pay go straight into a primary joint checking account every month. Then you and your partner can transfer a portion of your earnings to the individual accounts that are linked to it. Your company may even offer direct deposit to more than one account, doing the work of dividing up your money for you.
Figure out what’s right for you
Managing money together is a big step in any relationship. Trusting your partner, good communication, teamwork and knowing your options can help you find the right account(s) for your relationship. If you still have questions about which options might work best for you and your partner, we put together a video that explores different considerations.
Interested in exploring account options? Learn more about Bank of American checking and savings accounts.