A joint bank account can make it easier to manage your finances with a partner or family member. However, there are also some potential drawbacks of joint accounts to consider. Before you decide to merge your finances with another person, it's important to understand what a joint bank account is and how it works.

What is a joint bank account?

A joint bank account works like a typical bank account; the major difference is that it’s co-owned by two or more individuals who all have the power to make deposits, write checks, withdraw money, and more.

Joint accounts make it easier for couples and families to keep track of their spending, cover shared expenses and save for future goals in one place. According to a 2022 study by CreditCards.com, 57% of American couples have a mix of separate and joint financial accounts, while 43% of couples have joint accounts exclusively.

Most banks and credit unions offer joint accounts, including joint checking accounts, joint savings accounts, joint credit cards, loans, lines of credit, and more.

Pros and cons of a joint bank account

Before opening an account, be sure to evaluate the pros and cons.

Pros:

• Joint accounts create greater financial transparency between account owners. When you share an account with your loved one, you can both see how much each person is contributing and how the money in your account is being spent.

• Having a joint account simplifies your budgeting and overall finances. Keeping all of your funds in one place makes it easier to plan for and cover shared expenses.

• Joint bank accounts can help you track progress toward shared savings goals. Whether you’re saving for a home with your partner or teaching your child the importance of saving, pooling your funds in the same account can help you both keep track of your progress.

• Joint accounts have greater insurance limits. The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000 per depositor, per institution, per ownership category. So when you have a joint account, that coverage applies to each co-owner. So if your joint account has two account holders, the balance may be protected up to $500,000, depending on whether you have other funds on deposit at the same bank.

Cons:

• Joint accounts can lead to a lack of privacy when it comes to your spending habits. Co-owners of the account can see the full transaction history, including deposits and withdrawals. If you’d rather keep some of your transactions private, it could be difficult with a shared account.

• All co-owners are responsible for any fees or overdrafts. Joint account holders are equally as responsible for any mishaps. If another account owner overdrafts, for example, you're also on the hook for the subsequent fees.

• If your relationship ends, closing your account and divvying up your assets could be difficult. Banks set their own rules about who can close a joint account and how. Not all banks require signatures from both parties to do so. And all account holders have the right to access all of the funds in a joint account, regardless of who initially deposited the funds. If the joint owners are unmarried, dividing those assets can become tricky. For married couples going through a legal separation, there is an added layer of legal protection.

Situations when a joint bank account makes sense

There are several instances when having a joint bank account could make sense for your financial situation. You might consider a joint account if:

• You’re merging your finances with a partner or spouse: Couples who have shared household or childcare expenses may find that it’s easier to track and pay for those expenses if they are saving and paying their bills from the same account.

• You’re helping your child manage their money: Parents who want to teach their child to manage their own finances early can walk them through the basics with a joint bank account. Many banks offer accounts for kids and teens that come with parental ownership and safeguards in place to limit overspending. Note that once your child reaches 18, these accounts typically transition to regular bank accounts, and parents no longer have joint ownership.

• You have an aging parent who needs help managing their finances: If you have an elderly or ill parent, a joint bank account takes the pressure off of them to manage their own personal finances. In many cases, joint bank accounts also come with a “right of survivorship,” meaning that if the primary account holder dies, the funds and right to the account pass on to the surviving owner.

Read more: Should unmarried couples have joint bank accounts?

How to open a joint bank account

Opening a joint bank account isn’t any different from opening a personal bank account for yourself. The only difference is that your bank will ask for personally identifying information (Social Security number, government ID, birth date, address, etc.) from all joint account owners. Plus, everyone will need to sign the account agreement.

If you decide to open a joint bank account, be sure to communicate with the other account owner(s) to make key decisions, such as choosing a financial institution, how the account will be used, and how much you’ll each contribute.

FAQs

Can I open a joint bank account if my partner and I are not married?

Yes, you can open a joint bank account with your partner even if you are not married.

Can one person withdraw all of the money from a joint bank account?

Yes. Regardless of how much each party has personally deposited into the account, all co-owners have equal access to the account and the right to withdraw funds from the joint account at their discretion.

Am I responsible for charges on a joint credit account even if I did not make them?

Yes. As a co-owner, you are equally responsible for any charges or fees related to your account.