If you are a minor or married, you may be considering getting a joint checking account. However, if you have never had a joint checking account, you may be looking to learn more about how joint checking accounts work and what you can expect out of the process.
The Top Line
- Joint checking accounts are a very commonly used type of account, especially by minors and married couples.
- Joint checking accounts can provide you with some very good benefits that make banking easier and safer in some situations.
- While joint checking accounts do have many benefits to offer, they are not right for everyone. There are some limitations to joint checking accounts that make them good for some, but not for others.
- Our overview of joint checking accounts will provide you with a guide to how joint checking accounts work and what to expect when you use a joint checking account.
What is a Joint Checking Account?
If you want to understand joint checking accounts and how they work, there's no better place to start than with the definition of a joint checking account. Joint checking accounts are checking accounts that help you manage and use your money, just like any other checking account. The notable difference with joint checking accounts is that they can be accessed by more than one person. They are meant to provide two people with access to the funds within. Typically, all the signers on a joint checking account have the same rights to make decisions about the account and to access the funds.
Advantages of a Joint Checking Account
Joint checking accounts are so popular because they offer a lot of benefits, especially for those that need to have one checking account for two people. Here are some of the benefits of a joint checking account.
One of the major advantages to a joint checking account is relevant for parents who open a joint checking account for their children. This arrangement allows parents to teach their children about responsible money use and budgeting while also maintaining a level of control and safety. Eventually, these joint accounts could graduate into a regular checking account for the child.
Another benefit of a joint checking account is the convenience that it provides. This is especially true for married couples. Married couples that need to access the same pool of funds can open a joint checking account so that they each get a debit card and checkbook that draws from the same account.
A joint checking account can help with estate planning. If you are planning to leave the funds in the account to your spouse, he or she would have constant and immediate access to the funds if you were to pass away.
Disadvantages of a Joint Checking Account
There are many benefits of a joint checking account, but there are also some downsides that you should be aware of. Here are some of the disadvantages of a joint checking account.
When you open a joint checking account with someone else, you are putting a lot of trust into that person. You are telling them that you trust them and you are putting your money into an account that can be accessed by another person. This could leave you vulnerable, and is a potential weakness in your personal finance plan.
Another weakness of joint checking accounts is that there could be some restrictions. This could come in the form of transaction limitations that are put in place to protect both parties who own the checking account. This could create an inconvenience and frustration.
Because both owners of a joint account have access to the funds in the account, it can be difficult to know how much is in the account. It is possible to accidentally overdraw the funds on the account. If you have a joint account, it's important to communicate regularly with the other account holder.