A joint checking account is a checking account shared by two people. Most often this arrangement is common when married couples commingle their funds. It can also be an option for a parent and child, or for partners, particularly gay partners that don’t have access to marriage or partnership rights under state or country law. In these circumstances, each participant in the joint checking account is entitled to all rights of the account, including withdrawal of all funds. Additionally, should one partner have unmet credit obligations or start bouncing checks, the full amount of the joint checking account could be accessible, though there are some ways around this.
Most joint checking account types work in the following manner:
Checks are issued in both party’s names and either person can write a check.
Each account owner has an ATM card that accesses the account.
Either owner can make inquiries of the bank and both could have online account access.
Both people deposit all or an agreed upon amount of funds into the account.
If there is difference in amount of funds deposited, this doesn’t affect use of total funds.
There are very good reasons to have a joint checking account, especially for married or lifetime partners. Having one account can save money, especially in bank fees. Joint accounts don’t cost anything more than a single account. Another advantage is that if anything happens (illness, injury, death) to one of the partners in the account the other person has access to all funds immediately without any hassle. Providing this access makes good sense on many levels.
People shouldn’t necessarily be afraid of having to keep all money in the joint account. If both parties want spending money or money they don’t have to account for to the other partner, each partner could have a savings account or could simply pull out walking around money in cash after depositing paychecks. This can be very helpful if one person is drawn to impulse purchases and understands purchases can only be made out of the withdrawn money. Some also argue that couples are closer when they share and plan their financial lives together (though there are exceptions), and having joint accounts accomplishes this. Moreover married couples may already have access to each other’s funds and responsibility for each other’s debts if they live in a community property state.
Some people do argue against having a joint checking account. People with huge debt coming into a marriage might, if sued, end up costing their partners any money that’s held in the joint account. Others have very different spending habits and don’t want to have to modify these or account for how they spend their money. The decision not to hold money jointly can be problematic though, because it does mean that people will have to do extra coordination to get the bills paid on time if they are equally sharing in rent, food, and utility payments. In some cases, it’s recommended people don’t share a joint checking account. Those living together, for instance, may not have any type of legal protections if one person removes all money from an account.
The joint checking account is certainly a matter of consideration. It can be a convenient means to keep track of spending or it may turn into a power struggle. For those considering marriage or partnership, it’s a very good idea to decide in advance how finances will be commingled. This can provoke important conversations about financial plans once a lifetime commitment begins.