By  Updated on Thu Jul 17, 2014

What to Consider Before You Open a Joint Checking Account

What to Consider Before You Open a Joint Checking Account

Adam Jones / Flickr source

Most couples want to establish a joint checking account in order for them to deposit their income into one account to handle their joint bill responsibilities including mortgage payments, utilities and credit cards. Having a joint bank accounts means both parties that signed on to account are equally responsible for the handling of the account. 

While many couples want the convenience of the joint bank account, unmarried couples may find they pose a lot more problems.

Whatever reason you are planning to open a joint checking account with your spouse, your significant other, your family member, or your business partner, it is important to consider what could go wrong.

How To Apply for a Joint Bank Account

The process for opening a joint bank account is similar to the process of opening a sole account. You will need your basic identification including a photo ID, proof of residence, Social Security cards, and other contact information. Depending on the banking practices, a credit check may be used to determine your eligibility. Some people, due to past credit or banking mistakes, may not be able to open any kind of bank account. (If you’ve been denied a checking account, check out this story on second-chance accounts.) Each bank will have the required paperwork to be completed by both parties.

Most joint account holders will also have other things to think about concerning the establishment of a joint account. These issues concern the handling of the account in the event one of the parties should die. Rights of survivorship on an account are typical for married couples. When it comes to business setups, partners choose a tenancy in common account type that allows the deceased’s assets to go to individuals designated in a will.

Potential Dangers of Opening a Joint Account

Regardless of the reasoning behind the opening of a joint bank account, the No. 1 concern for all parties involved is the potential for one person to harm the other financially. Because both parties have access to the joint account funds, one person could take the money without needing permission and the second account holder will not be able to fight it through the bank. They will need the courts to help them resolve the issue which can be financially and emotionally burdensome.

Another concern joint account holders should have is the management of the account. Whether or not the couple is married, one party may be less financially responsible than the other. This can lead to a large amount of bounced checks or ill-spent money. The banking history of the joint account holders can pose problems in the future concerning money issues and credit. It can also lead to the ineligibility of both parties for future bank accounts.

Lastly, it is important for account holders to understand the difficulties in closing a joint account. Both parties must sign the required documentation in order for the account to be inactive. In the event there is a disagreement between the joint account holders, one of the parties may make it difficult to have the account closed by refusing to sign off on the account.

Real-World Considerations

There is more legal protection and recourse for married couples and business partners when it comes to joint financial assets. Where the real concern regarding joint bank accounts lies is with couples that are neither married or in business together. For whatever reason the account is established, things can go wrong quickly — as they tend to do where money is concerned.

If you have been asked by a relative that is not your spouse or by your significant other to open a joint bank account, you may want to think twice about the potential consequences this could have. People who are not able to qualify for credit or for a bank account may need another individual’s financial strength. Situations like this often lead to problems both personally and financially.

If you have been approached by someone to start a bank account, make sure you are very familiar with them and their motives. You may want to consult with an experienced attorney about drawing up a legal agreement that protects you in the event something goes wrong. You will have to resolve such issues through the legal system and not the bank, but at least you will have some recourse in the event the arrangement sours.

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