Joint bank accounts are convenient for two or more individuals to pool their funds to be in one spot. This makes managing household finances more efficient however it could come with some major drawbacks in the event that you select not the right person to open the account. This is what you must know before deciding if the joint bank account is the best option for you, and how to get the joint bank account.
What is an account at a joint bank?
The term "joint bank" refers to an account owned by two persons. Most of us imagine married couples who create a joint checking as well as a savings or checking account however this isn't the only method individuals use joint accounts. A few other common usage scenarios include:
- A parent who creates an account jointly with their child in order to track their spending
- A child of adulthood who is joint owner of their parent's account in order to aid them in managing their financial affairs
- Business partners who open a shared business bank account, so that they each have access to the company's money
It's pretty easy to open an account in a joint bank. You don't need to be closely related. It's not necessary to be limited to two persons also. More than three people are able to share a bank account if they'd like.
What is a joint bank account function?
Joint bank accounts function exactly like single bank accounts that are of the identical kind. There is only one difference: the owners of the accounts are able to access the money. Thus, for instance, checking accounts allow the jointly owned owners (account holders) to sign checks and pay for bills using the account. They can also use debit cards to withdraw money. Any account holder with a joint savings account is able to access the funds at any time.
Money market account joint accounts, as well as certificates of deposits (CD) accounts, are available, although they are not as common. They work in the same way as CDs and money market accounts held by a single individual.
Are joint bank accounts the right choice for you?
An account with a joint banking partner makes managing finances much simpler, especially for couples as opposed to the process of transferring funds between separate accounts. The money is easily accessible for both accounts to access at any time.
A joint account opening also increases the FDIC insurance for the account. In general, the FDIC will insure your account up to $250,000 for each type of account per bank. For joint accounts, it covers you up to $250,000 for each depositor. If a couple creates the savings account jointly the account is covered up to $500,000. That's an enormous benefit for people with huge balances.
Because joint accounts grant everyone equal access to the account and access to all accounts, it's important to choose your partners wisely. If you establish a bank account online along with your spouse and then they take the money out and you don't have any recourse, there's nothing you can do to stop it.
It is best to set up joint bank accounts with someone you can trust completely. If you are uncertain about their handling of the money, ensure that you clearly state the rules prior to opening the account. You can also avoid opening an account that is joint with them in any way.
Another issue is that joint accounts do not allow any privacy. Both parties have access to every transaction on the account. This could be a problem when one party is trying to surprise their partner with gifts. This is why some couples prefer to set up a joint bank account to pay for their everyday expenses however, they have separate accounts that to use for their individual gifts or purchases.
What are the documents you need for opening an account with a joint bank?
A joint account with a bank is comparable to opening a single bank account however, you'll have to supply personal information for all co-owners of your account. This includes all the information needed for each individual:
- Full legal name
- Birth date
- Address
- Telephone number
- Social Security number
A majority of banks will require a type of identification issued by the government such as a driver's license or passport for each individual they accept. Some banks will also require a utility bill or other document proving the address. Contact your bank for what you'll require to submit.
In the event that the new account is subject to an opening deposit minimum requirement and you're required to have funds ready to make a deposit when you create the account. Meet with the person signing up for the account in order to determine how much each will contribute.
How do you start the joint bank account?
The majority of banks permit the opening of joint bank accounts online However, if you decide to go with brick-and-mortar you may also go to the branch of your bank to open a joint account there. Follow these steps:
- Select the best banking institution and account. Talk to your partner about the kind of account you're looking to open and choose a suitable bank that you can cooperate with. Make sure you consider the fees associated with accounts as well as access to funds mobile and online banking tools as well as customer service when choosing which bank is best for you.
- Collect your documents. Contact the bank to find out what documents and details it needs and have them prepared.
- Complete the online application or schedule an appointment with any branch of the bank. Choose"joint account" or the "joint account" option and fill in all the information needed to establish the account.
- The account must be funded. It is possible to transfer money electronically or by wire transfer from a bank account. Some banks will also permit you to make a deposit on cash or checks.
Once you've finished the steps above both of you will be able to access the account in the same way as every other account at a bank. Each person can see tup direct deposit into the account as well as set up online accounts so that they can check their balances and pay their bills. If the account is able to allow it, both parties can purchase checks as well as an ATM card to make withdrawals.