Article Summary:

  • Joint bank accounts let two or more people keep their money in a single, shared account.
  • Shared bank accounts help minors get access to bank services. 
  • Pros of shared accounts include a shared approach to money and better-informed couples.
  • Cons of shared bank accounts include lack of privacy and shared consequences to financial decisions.

Bank accounts make it easier to manage money, as well as play an important role in keeping cash safe. It's a simple process to open an account on your own. So, what happens when you share finances with another person? Joint accounts help consumers pool funds and make shared financial decisions.

Before taking the step, however, it may help to know the joint bank account pros and cons and when they make the most sense.

What Is a Joint Bank Account?

A bank account that two or more people own is considered a joint account. It lets them access the bank services and the funds held inside the account.

Both checking and savings accounts can be set up as joint accounts, with the names of both accountholders as the rightful owners.

Who Can Open a Joint Bank Account?

While joint bank accounts are commonly opened by married couples, any two people can take that step. Examples of people who might want to open a joint account include business partners, domestic partners, or friends. Bank accounts opened by children usually need an adult joint account holder available, as well.

Joint accounts can be opened by any two people who trust one another to share access to funds in the account.

Pros of Opening a Joint Bank Account

There are significant advantages for people wanting to open a joint account, especially for those who are married or living together as part of a family.

More Transparent Money Management

Life can get hectic for couples today, making a weekly budget meeting almost impossible. With a joint bank account, learning about the past week's purchases may be as simple as hopping on the bank website or swiping on an app. Both account holders have access to the account activity, eliminating one person being left in the dark about how much has been spent and what funds are currently available.

A joint account may also help build accountability if one of the account holders struggles with overspending or other bad money habits.

By knowing their actions are visible to a partner or friend, they may be less likely to overindulge. With their actions now affecting two people, the added accountability may be enough to change spending habits.

Shared Sense of Ownership

Many couples enjoy managing their lives together, and finances are no exception. Having a shared bank account allows them to feel like they are working to meet common goals.

A shared savings account, for example, may be used toward large shared goals, such as saving for a down payment on a house. A shared bank account with two debit cards may be used to pay for day-to-day expenses in a practical way to help a couple get out of debt. By shopping for and using a shared account, setting and meeting money goals can be easier to accomplish and a unifying experience, as well.

Easier to Meet Minimum Thresholds

Not all bank accounts have minimum thresholds for opening or maintaining an account. For those that do, meeting the minimum may be difficult on one salary. By sharing an account, maintaining a minimum balance becomes less challenging since money can be pooled to meet minimum thresholds. 

In addition to avoiding minimum account balance fees, it may be a practical approach toward some savings accounts that offer larger annual percentage yields (APYs). If the individual account holders couldn’t otherwise meet the account opening requirements independently, it may be possible to do so as a team effort and earn more on their money.

Better Access to Services for Minors

There are practical advantages to opening a checking or savings account for kids, but not all young people qualify for their own accounts. By opening with a parent or guardian, youths can enjoy some of the benefits right away, including having their own debit card in some cases.

The responsible adult can act as the joint account holder to the minor child. When the child reaches maturity, the account can be signed over to the young person to start using on their own. This strategy ensures that even young consumers get access to bank services and can learn how to properly maintain a bank account even if they aren’t old enough to go solo.

Cons of Opening a Joint Bank Account

Not everything about sharing an account will work for couples or partners. Here are a few of the drawbacks.

Loss of Privacy

When sharing a bank account, both account holders get access to account statements, balances, and the transactions that occurred. While honesty may seem like the best policy, not all couples or friends will want to share every detail about their spending. It can make keeping a surprise birthday or a romantic jewelry purchase very difficult to hide.

Lack of Separation

It can also be hard for couples who like to separate their finances. Yes, paychecks can be tracked and expenses counted, but eventually, it all ends up as part of a combined monthly bank statement with one running total for the account. Couples may try to manage the appearance of separate finances using two offline bookkeeping systems, but this is a time-consuming task for handling commingled money. In the end, that money isn't treated as anything but shared.

Shared Consequences

Another drawback to a joint account is that one mistake may affect two people. Imagine if one spouse splurges on a large purchase without enough money in the bank. The account becomes overdrawn, and overdraft fees are assessed. These fees are now the problem of both account holders, even though the second person may not have had anything to do with the overspending.

Because both account holders have equal access to the funds in the account, one can make decisions for both, even if these decisions aren’t agreed upon in advance.

These shared decisions also apply to how the account is set up to work, such as account alerts for purchases above a certain amount or the unique spending or saving goals to be viewed within the account app. 

If one prefers notifications for $500 purchases and the other for just $100, these features become less useful overall. It may be difficult to decide which person gets text messages about deposits or to whom email statements should go.

Before Opening a Joint Bank Account

These simple guidelines may help the process of opening a joint bank account go smoothly.

  • Choose an account together. Talk about what the bank offers and how it lines up with goals. Pick an institution with which you both feel comfortable and that you can use for other account types, such as a car loan or investment account.
  • Honestly discuss money habits. Are both of you spenders? Savers? Not sure? By talking through what’s likely to happen, you can then have a game plan in place to avoid the pitfalls. Talk about past spending mistakes and what can be done to avoid repeating those mistakes in the future.
  • Set goals. More than a place to set aside money for bills, your joint account can be used to meet money goals, too. Get an idea of what can be saved, how much to set aside, and when to check up on progress. This may be a good time to discuss checking vs. savings accounts and when money should be put into each.
  • Explore tools. Many accounts come with basics like debit cards, and some come with banking apps. Your chosen bank may offer extras such as access to financial advice, credit scores, or enhanced planning resources. Talk about what’s available and which tools will come in handy. Then make a plan for when you’ll use them in your own lives.

Making the Joint Account a Part of Your Financial Life

It can take time to set up an account, even after you’ve decided to go for it. A bank representative can help you with best practices for a smoother transition, including how to set up direct deposit for paychecks and automatic payments for monthly bills and expenses.

By taking advantage of some of these automated tools, you can minimize the work of maintaining two people’s finances from one account.

For additional money management tips, read more PNC Insights.