How to open a joint bank account

By Citizens Staff

When you combine your life with someone else's, you may be thinking about joining your finances as well. However, the conventional wisdom is that even in the happiest relationships, finances can be a source of contention.

So, does that mean a joint bank account is a bad idea? Not necessarily. When used appropriately, a joint checking or savings account can make paying bills easier, help teach a child banking skills and cut down on the need to transfer money back and forth.

Keep reading to learn the benefits of a joint bank account.

A joint account refers to who can access and has ownership rights to the money in the account. Both owners can withdraw, deposit and monitor the money in the account. In many cases, each account owner is issued their own debit card, but depending on the state, minors may not be eligible to receive a debit card. Instead of transferring money back and forth or deciding who's picking up the check at dinner, joint account holders have the ability and freedom to spend individually and save together as a team.

Opening a joint bank account is similar to setting up individual accounts. Most banks will allow you to sign up online or in person as long as you have the required information for both owners. You'll likely need:

• Identification
• Current address
• Social Security number
• Date of birth
• Funds for an opening deposit

Most banks will require you to make an initial deposit into the joint account when you open it, and some banks have deposit minimums.

Before you choose an account, consider the following:

• Look into account fees. Some accounts charge a fee for monthly maintenance or if your balance dips below a certain amount. It's a good idea to find out if the bank might waive the fees in certain cases or to look for an account that has no fees.
• Find out the annual percentage yield (APY). The APY is how much interest your account will earn over a year. Usually, the higher the APY, the better. Keep in mind that some banks require a minimum balance before your money can start earning interest.
• Discuss the use of the account. Are you sharing an account to save for a future shared goal? Or do you plan on using it for everyday expenses? Both account owners should agree on how the money will be used.

Opening a joint account can be a strong financial tool, but it's important to be realistic about the potential drawbacks. Weigh these top pros and cons of joint bank accounts to help you decide if one would work for you.

Combining finances with someone isn't restricted to romantic or married couples only. There are a few other situations where a joint bank account might be a benefit. Take a look at some of these examples:

• Senior citizens and caregivers. As family members get older, you may need to help them with their finances. Rather than setting up a power of attorney, you can be added as a cosigner on a joint checking account with them. This will give you full access to statements and funds as well as responsibility for the account. In some cases, joint accounts offer what's known as rights of survivorship. This means that in the event of the death of one of the account owners, the surviving owner becomes the sole owner of the account without having to go through probate. This can be especially helpful when a joint account is owned by spouses or a parent and child.
• Parents and children. Banks that allow minors to open accounts usually require an adult to be a joint owner. In addition to allowing parents to closely monitor spending, joint accounts provide the opportunity to teach kids money management skills, such as how to create and stick to a budget.

Now that you understand the potential benefits and drawbacks of a joint bank account, you're in a better place to decide if it's right for you. A joint bank account may be the right solution in these situations:

• Romantic partners with shared finances
• Business partners
• Parent and child
• Older adults and caregivers

Trust and communication are essential parts of what makes having a joint account work. So if your relationship isn't there yet, a joint account may not be the best idea for your situation. Talk through your goals and expectations with your partner to ensure you're on the same financial page.

Opening a shared account is a big step but one that can ultimately make life a little easier, whether you're sharing the account with a spouse, a child, a parent or a business partner.

Thinking about opening a new account? Learn more about how Citizens can help you reach your financial goals.