Joint Bank Accounts: What Are They and How Do They Work?

monkeybusinessimages / Getty Images/iStockphoto

Right now, you are the sole owner of your bank accounts. However, you’re thinking about opening a joint bank account with someone else.

As a financially responsible person, you want to learn as much as possible about joint accounts before making a decision. Use this guide to help answer your questions about a shared bank account, so you can decide if opening one is the right move for you.

What Are the Rules for Joint Bank Accounts?

The rules for joint bank accounts are relatively the same as for solo accounts. The biggest difference is that both people on the account have equal rights to the money inside.

Both of you can deposit and withdraw funds at any time. This can be a great way to pay joint expenses and save up for shared goals together.

Of course, it also means you really need to be able to trust the other person, because they have a legal right to take every penny out of the account. If they overdraw the account, both of you will be held liable for any fees incurred. Additionally, if they allow any debts to go unpaid, creditors can seek money in shared accounts for repayment.

It’s also important to note that you might have different tax obligations from the other person on your account, so you may want to consult an accountant.

As for protections surrounding your money, each co-owner is insured up to $250,000 for the combined amount of their interests in all joint accounts at the same financial institution — assuming the bank or credit union is covered by the Federal Deposit Insurance Corporation, which most are. Therefore, if the total amount in your joint account is $500,000, you would be insured for $250,000 and your co-accountholder would be insured for the other $250,000.

Can You Have a Joint Bank Account if You’re Not Married?

If you’re stressed because you want to open a joint bank account with someone who isn’t your legal spouse, you’ll be pleased to learn marriage isn’t a requirement. You can certainly open an account with a boyfriend, girlfriend or fiancé, but you don’t actually need to have a romantic relationship with the other person.

For example, you might open a joint checking account with a minor child. Or, you could open a joint bank account with an aging parent, both to help manage their expenses and to have access to the account if they pass away, without having to consult a will or obtain a lawyer.

Which Bank Is Best for Joint Accounts?

The best bank for a joint account will not be the same for everyone. Factors such as whether you prefer to bank online or in person, minimum balance and deposit requirements, access to ATMs and interest rates can make a difference. These features might not hold equal weight for you and your joint accountholder, so be sure to conduct your own research.

Here’s a look at five key features to consider when shopping around for a joint checking account.

1. APY: If you tend to carry a balance in your checking account, seeking out a bank that will pay you interest is a great way to earn free cash. As of Dec. 19, 2022, the National Deposit rate for checking accounts is 0.05% and 0.30% for savings accounts, according to the FDIC. Generally speaking, banks set their own interest rates on accounts so it’s wise to check a few banks to find the best rate.
2. Minimum balance requirements: Some banks require you to have a minimum amount of money to open an account, as well as a minimum account balance at all times. Failing to do this can result in fees, so it’s important to have this information up front.
3. ATM access: If you want to use an ATM for activities such as getting cash out of your account, making deposits and checking your balance, you need to find out about the level of access offered. Many financial institutions belong to a network like Allpoint, which offers complimentary access to ATMs across the world. While this is becoming increasingly common, many financial institutions only allow free transactions when using their ATMs.
4. Overdraft fees: It can be easy to inadvertently overdraft your checking account — especially when sharing it with someone else. Many financial institutions offer overdraft protection up to a certain amount, so you’re not hit with fees if you accidentally spend too much.
5. Online vs. traditional banks: Many banks operate exclusively online. On the other hand, traditional financial institutions like PNC Bank and Wells Fargo have brick-and-mortar locations. You’ll need to determine if you and your co-account holder would prefer to do your banking entirely online or if you want the option to visit a physical branch location.

Final Take

Opening a joint bank account with someone is a huge deal. While it will function largely as a solo account for usage purposes, you’re legally sharing both the money and responsibility with the other person, so make sure they’re someone you can fully trust.

Information is accurate as of Jan. 19, 2023.