Managing your money isn’t a static thing: It changes over time, say, as you pay off student loans, get a new higher-paying job, and perhaps partner up.
If you do have a partner, you may wonder what is the best way to handle your cash. Should you keep your bank accounts separate or merge them? Or maybe do a little of both? Combining some or all of your resources can benefit you with early achievement of goals, transparency about your finances, and fewer fees.
This guide can help you make the decision about whether a joint account’s benefits are right for you. Here, you’ll learn more about what a joint bank account is, how it works, and the pros and cons of having this kind of account.
What Is a Joint Bank Account?
A joint bank account is an account that’s shared between two people.
Simply put, a joint bank account is an account that’s shared between two or more people. Each person has full access to the money, whether withdrawing or adding to the funds.
While some couples will open an account and put all of their combined cash into it, other couples may choose to open up a shared bank account in addition to their pre-existing individual accounts.
Shared accounts can be both checking and savings accounts, and which account you choose — if you choose to create one at all — will depend on your specific goals and circumstances.
Sharing a financial account can come with some great benefits, as it generally provides each account holder with a debit card, a checkbook, and the ability for two people to deposit and withdraw funds into the same account. It can also come with some potential drawbacks.
One of the biggest decisions a couple will make is whether they decide to treat their money as a shared asset or as separate entities. As with any discussion about money, every individual or couple will have different goals and experiences, so it’s helpful to take a look at both sides. Considering the pros and cons of joint accounts may help you decide if this kind of account suits you.
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What Are Some Pros of a Joint Bank Account?
There are many potential joint account benefits, which is why so many couples choose to open a shared account when they get married or start cohabitating.
Better Financial Management
Because so many things in a relationship are tied in some way to finances, a shared bank account could be the key to smoother decision making and better money management.
For couples who are married, living together, or sharing a lot of common expenses, such as rent, groceries, a car payment, or a mortgage, having a shared pool of money can be a smart tool to help manage shared costs.
Convenience
One of the biggest potential pros of a shared bank account is sheer convenience. Instead of having to transfer money through an app or write your partner a check for your portion of a shared purchase, a shared bank account connects both partners’ accounts through a common account and can make payments more seamless.
Transparency
Another possible benefit of combining bank accounts is clarity. When a couple has siloed finances, it can sometimes feel like both individuals are in the dark about how each person is spending their money.
Among the advantages of a shared account is that couples may experience fewer surprises.
Whether you decide to open up a joint account solely to tackle shared bills and payments or to combine your finances altogether, a joint bank account can be a useful way to experience giving your partner a closer look into your financial life.
The transparency that comes along with this decision can sometimes strengthen a relationship.
Saving Money
When it comes to joining all of your money into a single account, another potential benefit is saving on banking fees that would have otherwise been charged to maintain several different individual accounts.
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What Are Some Cons of a Joint Bank Account?
Next, consider some of the possible downsides of a joint bank account.
Relationship Stress
Opening up a joint bank account can be a big step, and it may be important to decide whether or not your relationship is ready. Some couples are ready to have that level of sharing. Others may not be.
Giving another person complete access to your financial life can be fraught. It can put one’s money style and spending habits under a spotlight.
Joint Responsibility
The money in a joint account is shared, which can have unexpected complications. If one partner earns more than another, they may take on a greater share of expenses when funds are pooled. For some couples, that’s fine; for others, it might now be. Also, if one person spends more freely, that could empty out the account more quickly than the other might like.
Complicated Finances
Sometimes, shared finances or even the entire relationship might not work out. In that case, you could wind up having to untangle your finances in a way that you wouldn’t have to if you hadn’t merged your money. (The same could hold true for joint brokerage accounts, too.)
Here’s how this information looks in chart form:
| Pros of Joint Accounts | Cons of Joint Accounts |
|---|---|
| Better money management | Relationship stress |
| Convenience | Joint responsibility |
| Transparency | Complicated finances |
| Saving money |
Keeping Joint and Separate Bank Accounts
As you consider your options, know that it doesn’t have to be all or nothing. You could open a new joint account while keeping your own separate bank accounts. Or you could decide between separate vs. joint accounts, and go all in on one or the other.
Some couples may find that the best solution is to pool some funds in a joint account for specific purposes, from paying for basic living expenses to saving for the down payment on a house or building an emergency fund.
You might keep your own separate accounts as well, where you can spend on what you like without anyone watching (or judging). Or perhaps you want to keep some funds separate so you can pay off your student loans, while your partner doesn’t have any.
In addition to making financial logistics more streamlined, opening a joint account may also help you and your partner practice better communication about money.
Opening a Joint Checking and Savings Account with SoFi
If you decide that a joint account feels right for you, you’ll have a number of options, including opening a SoFi joint account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What are the disadvantages of a joint account?
Disadvantages of a joint account include complete transparency (meaning you and your partner can see each other’s financial transactions), responsibility for the other person’s cash management, and complications if you decide to separate down the road.
Are joint bank accounts a good idea?
Joint accounts can be a good idea and can help streamline money management, save on fees, and reach financial goals more efficiently. Much depends on the two people involved and how well they can sync their financial lives.
Is it better to have joint or separate bank accounts?
That’s a personal decision. Joint accounts offer benefits like simpler money management, transparency, and saving money on fees. However, others prefer to keep separate accounts and have control over their funds as well as privacy.
Who owns the money in a joint bank account?
Money in a joint bank account belongs to those who hold the account. Each person has the right to add or withdraw funds.
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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
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SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
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Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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