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What to consider before opening a joint bank account

What we'll cover

  • What a joint bank account is

  • The pros and cons of combining finances

  • Answers to common questions

If you’re thinking about opening a joint bank account with someone, you probably have a lot of questions. Sharing a meal is one thing. Sharing finances? That’s a big step. Not to mention the practical considerations — both legal and emotional — you have to mull over before you sign up. 

You may be considering a joint account as you plan your wedding or maybe to help manage a parent’s estate. Whatever the reason, it can be a difficult decision. So before you start merging your money with anyone else, consider these questions and whether a joint account makes sense for you and your financial goals.

What is a joint bank account?

Any account that is opened by two or more people is considered a joint bank account . This is typically what you would open with your spouse or partner. The other types of joint accounts are generally referred to as survivorship accounts because they map out how funds should be allocated in the event of the owner’s death. These kinds of joint accounts are most common in estate planning .

Joint accounts can make it easier to manage debt, bill payments, and other shared expenses.

How do joint bank accounts work?

Any joint account essentially works the same as an individual account, just with two or more owners. So, if you have a joint checking account, you’ll still be able to add funds, make debit payments, write checks (if that’s your style) and do anything else you would be able to do with your own account. The only difference, functionally, is that you and your account co-owner(s) are both contributing to the funds and can both withdraw them.

What are the pros and cons of a joint bank account?

Having a joint account offers plenty of benefits, but sharing your money can present challenges as well. To determine the right fit for your financial needs, you need to consider both.

Top pros of a joint bank account

Simplified money management - By putting your shared money in one place, joint accounts can make it easier to manage debt, bill payments and other shared expenses. And while couples might be the most common instance for shared accounts, they aren’t the only ones who can benefit from easier money management. 

Sharing responsibility and access to funds can be helpful in a variety of circumstances. Adult children may find it easier to manage an ailing parent’s finances if they share ownership in a joint account. As an added benefit, a joint account can facilitate open communication and accountability when it comes to your savings and spending practices.

Maximize FDIC coverage - One of the biggest pros of a joint savings account is that it helps you maximize your FDIC insurance coverage  at FDIC-member banks. With a combination of accounts, you can insure more money than a single depositor at a single bank. Visit the FDIC’s EDIE (Electronic Deposit Insurance Estimator) to learn more about maximizing your FDIC insurance coverage.

Save more together - If you open a joint savings account, you can also benefit from saving more faster both through higher interest rates (more money accrues more interest) and by holding each other accountable. With the Ally Bank  Savings Account’s buckets , you can even share savings goals and track your progress together, getting to that goal twice as fast.

Potential cons of a joint bank account 

Lack of privacy - With a shared account, what’s yours is also the other account owner’s. It has its benefits, but it also means you will both be able to see any and all spending that happens in the account. For this reason, some couples might have their own individual checking account in addition to a shared savings account. That allows you to do your own discretionary spending on non-shared expenses. It can also be a good way to keep those gift surprises under wraps.

Shared liability - In the event of legal action against either account owner, your finances are both at risk. For example, if your partner defaults on a debt, the creditor could seize your money in a settlement. 

Money disagreements - Finances are a very personal thing. Sharing them with another person can occasionally create conflict. Whether it’s a disagreement on budgets or one owner exceeding them, tensions can quickly arise. Open, honest communication (or the separate checking accounts mentioned above) can help you manage these clashes, but it’s good to acknowledge they’re a possible (if only occasional) reality of sharing finances.

Who owns the money in a joint bank account?

You both do! Any of the owners of a joint savings account can view balances, contribute money or withdraw funds — all of which can streamline your financial life. 

How do you open a joint bank account?

You can open a joint savings account in person at a bank branch or online with just a few clicks and some personal information from each account holder. And with an Ally Bank  Savings Account , you and the other owner(s) can bank at your own convenience. That means you can check your balance, transfer money and more — from anywhere you have internet access. In addition, online banks often have lower overhead costs than traditional brick-and-mortar banks, so they can pass those savings on to you in the form of better rates.

Is a joint bank account right for you?

What you do with your money is a very personal decision. Gone are the days when couples were expected to combine their finances. It’s about finding the right fit for you and your partner. If you like the convenience of pooling your money for shared expenses, go for it. If you’d rather maintain financial independence, that’s OK too. An open, honest discussion will keep you both on the same page, whether or not your money is in the same account.

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