How to Open a Joint Bank Account and Why You May Need One

Managing money isn’t always easy. And if you share expenses with someone else, you may constantly worry if they will hold up their end of the bargain.

To make things easier, you may be thinking about opening one of the best joint bank accounts as a way to simplify your finances. This can be a good idea for many people, but not everyone.

To give you a better idea of what you can expect when sharing a bank account, I’m going to explain what a joint bank account is and why you might want to open one — and why you might not. Then, if this option feels right for you, I’ll walk you through how to open a joint bank account.

Let’s dive in.

What is a joint bank account?

A joint bank account is a bank or credit union account that is owned by two or more people. It functions like any other standard bank account, but ownership of the account is spread equally among co-owners who have equal rights to withdraw money from it. 

For example, joint owners of a checking account could both use a debit card to spend money from the account.  

As a joint account holder, you can withdraw or deposit money as you see fit. For this reason, it’s important that you trust anyone sharing an account with you. Although a joint bank account can be a good way to build a financial partnership with a spouse, roommate, business partner, adult child, or anyone else you need to share money with, sharing a bank account has some downsides you should be aware of.

Joint bank accounts: the pros and cons

There are a number of benefits and drawbacks of co-owning a bank account with another person. This isn’t limited to non-relatives either. Spouses or partners can share the same benefits and face the same challenges of sharing a bank account.

Joint bank account benefits

• Simplified bill payments: Couples or roommates can use the money in a joint account to cover shared expenses such as rent, utilities, and internet.
• Reach your savings goals together: Sharing a joint savings account can make it easier to save extra cash together, one of the important ways to make money. These savings can be put toward whatever matters most, whether it’s a vacation, emergency fund, or new appliances.
• Tracking your finances is easier: As co-owners of the joint savings or joint checking account, you know exactly how much money is going in and out of it, making it easier to track your finances. If you have one account and both set up direct deposit, you can take a lot of the guesswork out of tracking your money.
• Shared responsibility: With a joint account, you have equal access to the money. You share the responsibility of the account, and there’s no guessing whether the other person is keeping up on their end.
• More FDIC coverage: Both account owners are insured by the Federal Deposit Insurance Corporation up to $250,000. This increases the amount of total coverage on your joint account.

Joint bank account drawbacks

• Your money is vulnerable to their creditors. If one person falls behind on their debts, creditors may come after the funds in the account — even if half of it is yours.
• There could be too much transparency. Both account owners can see the account balance and all account activity, which means anything you purchase is visible to the other person. Some may feel a loss of financial independence due to this transparency.
• You’re liable if they’re bad at managing money. And vice versa. If either of you overdraws on the account, you’re both liable for any associated fees.
• It can sour relationships. If you both are on different pages financially and have different financial habits, a joint account could lead to increased tension, which could harm your relationship.

Our joint bank account recommendations

Here are our top picks for joint accounts:

How to open a joint bank account

If you love the idea of having one shared account, you’re probably wondering how to open one. I have good news: it’s simple.

Although the process for opening a joint bank account will vary from one bank to another, in general, setting up a joint account is no more complicated than opening a standard bank account for yourself. At a traditional brick-and-mortar bank, you both will likely have to visit the branch at some point to complete the account opening process. With an online bank, you can typically open a joint account in minutes, all from the comfort of your home.

Whether you choose in-person or online banking, you will probably both need to provide the following items and information:

• A photo ID like a driver's license
• Your address
• Your Social Security number
• Date of birth
• Opening deposit (if your bank requires one)

This is just some of the standard documentation you’ll most likely need. The bank may also require other information as a part of its account opening process, such as employment information and whether either of you are subject to backup withholding. 

Backup withholding is when a bank must withhold and send 24% of the interest they pay to you to the IRS instead. This can happen if you fail to report or underreport interest and dividends on your tax return.

FAQs about joint bank accounts

The bottom line on joint bank accounts

A joint bank account can be a great solution for couples, roommates, or anyone else who can benefit from having their money consolidated in one account. It can simplify bill payments, and it can give you a more united approach to saving toward shared goals.

Although a joint bank account is a great option for some people, it’s not the best option for everybody. Trust is a must when sharing a bank account with another person where both people have equal ownership over the funds in the account. If you fear the other person will abuse their access to your shared money, it’s probably best that you maintain separate accounts.