Joint Bank Accounts: Complete Guide 2024

Perhaps you need an easier way to split monthly bills with your spouse. Or you have shared expenses with your adult child and dividing the payments is tedious. Or you have an adult child or other caregiver who needs the ability to deposit and withdraw funds on your behalf.

In any of these cases a joint bank account can be a way to simplify your financial life. A joint account is simply a standard savings, checking, or money market account that’s owned by more than one individual.

Both account owners have the typical privileges that go with owning an account: the ability to access account details online, write checks, and withdraw funds.

Examples of joint bank accounts

Joint bank accounts: Pros and cons

Owning a joint bank account means all owners have the ability to make deposits into the account. Regardless of how much they contribute to the balance, each party also has full access to any funds in the account, as well as the ability to see any recorded transactions made by the other individual.

This can alleviate a lot of hassles for couples and parents with minor children, for example. However, shared ownership can also result in potential problems if you don’t fully trust the other person with whom you’re creating the account.

Pros

• There’s no need to calculate each person’s responsibility for expenses, because they’re all paid from the same account.
• It may be easier to create a monthly budget when all the available funds are in one place, rather than being separated in multiple accounts.
• Because they each have access to transaction information, both individuals have visibility into the other’s spending patterns.
• Joint accounts can help avoid disagreements about who’s paying more for shared expenses, because both people are contributing to and paying from the shared account.

Cons

• You need complete trust in the co-owner, as they’re able to spend all the money in the account.
• Generally, any account holder who can write checks on the account can close it, which means you’re not always in full control of your joint assets.
• You’re equally liable for any banking fees that are incurred, regardless of which party is responsible.
• Creditors may have the right to garnish (pull money from) joint accounts if the other owner is unable or unwilling to pay past debts.

Who can open a joint bank account?

While joint accounts are common for married spouses who split household expenses, they can be opened by any two (or more) adults who complete the account application. This includes unmarried couples, parents and their adult children, friends, and caregivers.

Many banks also allow parents to set up a shared account with children who are minors, although putting your money in their hands can be a dicey proposition. Depending on the financial institution, you may have the ability to put certain restrictions on the account. For example, limiting the amount your child can withdraw from the account within a certain window of time, or, requesting text alerts that allow you to better monitor account activity.

When is a joint bank account the right choice?

Sharing a bank account requires trust and healthy communication between the individuals involved. If those two elements exist—and there’s a compelling reason to merge ownership—setting up a joint account might simplify your financial life.

Joint accounts are commonly set up by married couples who are already sharing expenses, such as housing, utilities, and groceries. By pulling money from a common account, there’s no need to get out the calculator every time you pay a bill or go to the store. By using a check or debit card tied to the account, you’re automatically sharing those expenses.

It’s also easier to save for shared goals, such as the down payment on a home or a dream vacation. You’re both able to deposit funds into the account and see what the balance is at any given time.

But it’s not just couples who could potentially benefit from a shared account. For example, a joint account may enable adult children to oversee finances and pay bills for elderly parents who can no longer manage those tasks on their own.

However, creating a dual account also carries obvious risks because the co-owner has full access to any funds in the account. Unless you have a genuine need to share account access— or are dealing with a relatively small amount of money—you might want to think twice before getting a joint account with a friend or an unmarried partner.

How to open a joint bank account

If you plan to open an account at a brick-and-mortar bank, you may need to make an appointment with a personal banker. This individual can help you better understand how a joint account works and guide you through the required paperwork.

To create a joint account, you typically need:

• Valid identification for both account applicants (e.g. driver’s license, passport, or state ID).
• A completed application, which may require you to provide personal information such as your date of birth and Social Security number.
• An initial deposit to open the account.

When one of the individuals already owns an account, you can instead file paperwork to add another person as a joint account holder. The one who initially openly opened the account will typically be listed as the primary account owner who receives the annual tax documents—but both owners equally share the account assets and privileges.

Can I open a joint bank account online?

Most online banks also allow you to create a joint account. Instead of a personal banker walking you through the process, the website guides you through the required steps. Once you choose which banking product you want to create (e.g. savings or checking), the site will typically ask whether you want to open an individual or a joint account.

You’ll have to fill out the required personal information for each applicant, which may include a current address, Social Security number, and date of birth. If the account requires a minimum opening deposit, one or both applicants will have to provide the necessary funding.

In most cases an online bank will let you add a joint owner to an existing account. The steps vary from bank to bank. Discover® Bank, for example, requires both owners to complete an Add a Joint Owner Authorization Form and provide signatures.

Who pays taxes on a joint bank account?

The account owners share the balance in their account, so you could be forgiven for thinking that the Internal Revenue Service (IRS) would split their tax liability for interest income. Unfortunately, that’s not the case.

The government sends out just one Form 1099-INT annually, which shows the amount of interest the bank paid on the account. And that 1099 goes to the primary account holder. So, technically, that individual is on the hook for the entire amount of interest.

This is not necessarily a big deal for spouses, especially if they file a joint return on which all of their income is reported. However, it can make for a trickier situation when the account holder is not a spouse. This is where the trust element comes into play. When the tax liability is significant, it’s up to the other account owner to pay you their portion.

Can you separate a joint bank account?

Whether you can remove an individual from a joint account depends on the state you live in and your bank. Generally, you can’t, but there are exceptions.

Some banks won’t let you split up the account, period. U.S. Bank, for example, requires you to close the account and create a new one as an individual. The only exception is if one of the account holders dies.

How do you close a joint bank account?

Life is full of surprises. You may have to move across the country for a new job, choose to end a romantic relationship, or experience a falling-out with a close friend. All of these are reasons you may decide to close a joint account with your name on it.

Most states have a law on the books that allows one party to close a joint account, even without the consent of the other individual. That doesn’t mean all banks enact that as a policy, however. Some banks require the approval of all account owners before you can shut down the account.

Typically, closing your account is as simple as visiting your local branch or, in the case of online banks, calling its customer service number or going to its website.

Closing an account during a divorce

The trickiest part of closing a joint account can be figuring out how to split the money. This can get especially thorny for married couples going through a divorce. You may need an attorney to help you figure out whether the account is marital (shared) property or separate property, depending on the laws of your state.

In general, it’s a good idea to hold off on closing a joint account until a divorce settlement has been reached by both parties. Otherwise your ex-spouse may have the ability to claw back any money you acquired during the account’s closure.

Alternatives to joint bank accounts for teens

A joint account may seem like a good solution if you’re trying to build savings for your minor child or want a simpler way to pay them an allowance. Still, you might want to search out other alternatives that don’t involve giving them full access to your money.

Debit cards

The past several years have seen the emergence of several debit cards geared specifically for teen and preteen users, including Acorns Early, Greenlight, and BusyKid. These accounts give your child many of the perks of a traditional bank account, including the ability to deposit money electronically and make purchases with a swipe (or tap) of their card.

Most of the popular kid-friendly cards have a parent version of the app, which gives Mom or Dad the ability to pay for chores or establish an automated allowance. The apps are also designed to reign in your child’s worst impulses. Acorns Early, for example, allows parents to create one-time and weekly spending limits, so they’re not able to drain their account overnight.

Bank accounts for kids

An actual bank account can be a great way for kids to learn valuable finance skills they’ll carry into adulthood. Most states prohibit minors from creating an account in their own name, so these are technically joint accounts. Typically, however, you fund them with money that belongs to your child, minimizing risk to you as a parent.

Several bank accounts for kids exist. For example, with no monthly maintenance fees and the ability to earn interest, the Axos First Checking account is a solid option. Designed for teens aged 13 to 17, it provides a parent app for viewing your child’s transactions and the ability to set up alerts, so you’re always aware of how they’re using their dollars.

Custodial accounts

Unlike a joint account with a minor, a custodial account is legally the sole property of the child. However, a parent or guardian manages the money until the child becomes an adult. This can be a sensible solution if your primary objective is to save money that your child can spend only after they turn 18. Most banks allow you to set up a savings or checking account as a custodial one when you complete the application.

TIME Stamp: Joint bank accounts can help married couples and others share expenses

Joint bank accounts can help make life a lot simpler if there’s someone with whom you already share expenses, especially a spouse. They can also help adult children pay bills for older parents. Still, you’re giving your co-owner a lot of control over your money; think about the potential consequences if you don’t completely trust the other person’s judgment. If you’re a parent and want your older child or teen to have more financial autonomy, a separate debit card or bank account may be a better option.

Frequently asked questions (FAQs)

What are the best joint bank accounts?

Any type of bank account can be owned jointly by two or more individuals, which means you have a lot of options. In terms of the best joint savings accounts, with no minimum deposit or monthly maintenance fees, Live Oak Personal Savings offers highly competitive interest rates, allowing you to grow your balance over time. Quontic High Yield Savings is another excellent choice if you’re looking for an account with a strong annual percentage yield (APY). It has no maintenance fee but requires a $100 minimum opening deposit. In terms of joint checking accounts, Axos Rewards Checking and Upgrade Reward Checking Plus both pay competitive interest-bearing rates.

Is there a difference between having a joint bank account and being an account co-owner?

No. A joint bank account is simply a bank account that has two or more co-owners. Each account owner has the ability to deposit funds, make withdrawals, write checks and review the transaction history.

Are joint accounts FDIC-insured?

Most bank deposit accounts are protected by the Federal Deposit Insurance Corporation (FDIC), including accounts that are owned by more than one individual. Before opening an account, it’s always a good idea to double-check that the bank is an FDIC member. This way you can rest assured that $250,000 per depositor is protected, even if the bank runs into financial trouble. That means that a joint checking account offers total protection of $500,000 for two depositors.