When is the right time to open a joint checking account, and what should you know before you do?
Joint checking accounts—accounts in which two or more people have equal access and responsibility among the owners—tend to serve one of two purposes. First, they serve as a means to conduct banking on behalf of someone, such as an aging parent, who is no longer able to manage their finances themselves. Second, joint checking accounts serve as a general pool of resources in which to pay shared bills such as in business partnerships and committed relationships.
A joint checking account is meant to serve as a tool. Before opening a joint checking account with someone, ask yourself what your goal is. How do you want to use your money? Is it necessary to both have access? In instances where it's necessary to share a pool of resources, then a joint checking account is an excellent means to an end.
"Joint checking accounts are useful in that either account owner can access the money without authorization from the other person," said John Knoppers, Vice President and Branch Officer of United Bank. "So if a bill is due, but all of the funds are locked in one person's account, the other partner in the relationship doesn't have to wait to disburse funds."
Joint checking accounts provide a measure of financial security should something unfortunate—such as a medical situation, injury or death—happen to one of the owners. When one owner is unable to pay the bills, the other owner can still access the funds.
While joint checking accounts allow for shared ownership and shared responsibility, each owner can act independently of the other. No one person on a joint checking account is more entitled to the money, nor is one more at fault when something goes wrong.
"You really want to open a joint checking account with someone you trust," said Scott Stenstrom, Vice President of Fifth Third Bank Marketing.
Stenstrom cites trust and communication as two key characteristics in a relationship in which you want to open a joint checking account. Partners in joint checking accounts can foster communication by starting with a goal in mind, establishing a budget, keeping records, and engaging in an ongoing and open discussion. Communication might not just save your relationship, but your money as well.
Written by Cassie Westrate, staff writer for West Michigan Woman magazine.