What Is a Joint Account?

Zeta Team
August 5th, 2020 | 4 min

TL;DR: Opening a joint account can be a great choice for you and your partner as you make your financial journey together. However, it’s important to understand exactly what a joint account is and what holding one will mean for you.

When you hear the words "joint bank account," you probably think of a married couple combining their finances after they tie the knot. The truth is that a joint account can be so much more than that. There are many situations in your life when creating and maintaining a joint financial account with another person can be beneficial.

This guide will explain everything you need to know about joint accounts as well as when it may be a good time for you to enter into this sort of financial situation. It will also examine some common joint bank account rules in order to help you understand how these accounts can benefit you, as well as their potential drawbacks.

The Definition of a Joint Account

In short, a joint account is a bank account held by more than one person each individual having the right to deposit and withdraw funds. It's a misconception that joint account are for married couples when in fact, you do not have to be married or even romantically involved in order to open a joint account.

A joint account can be shared between spouses, siblings, friends, business partners, or even parents and children. Parents can use a joint account to monitor their child's deposits and withdrawals while teaching them how to manage their money. And while some accounts may allow you to set rules on how a minor child can access the money, a child over the age of 18 will have equal access to the account.

Both individuals are considered the legal owner of the account, and have an equal legal right to all funds contained within.

Who Owns the Money in a Joint Bank Account?

Both account holders own all of the money equally, regardless of who deposited it in the first place (or how much one contributes). If one holder of the account dies, depending on what state you're in, the account and all money contained within will most likely transfer to the surviving holder.

This means that one holder overdrafts the account, commits fraud, or commits other negative financial actions, both holders are considered equally liable and responsible.

Who Can Deposit and Withdraw Money from a Joint Account?

Both holders are allowed to both deposit and withdraw money into and from the joint account. This also means that one partner can withdraw all of the money contained without needing to obtain the consent of the other. If you open a joint account with someone untrustworthy, you could wake up one day and find your account totally empty with no prior warning.

When you open a joint checking account both account holders will be able to use that account to write and sign checks or use a shared debit card.

Some banks will allow funds to be transferred from a joint account into an individual account if both accounts are owned by the same bank. Not all banks allow this so check with your bank or credit union to understand their rules regarding transferring funds from joint to individual accounts.

When's the Right Time to Open a Joint Account?

How do you know if opening a joint account is right for you - in particular, if it's a good time to do so?

Couples may decide to open a joint account when they move in together, when they get married, or when they are preparing start a family. All of these represent key steps in building a life together and becoming more involved in each other's financial decisions.

For non-romantic partnerships, such milestones might not be so clearly defined. However, some important guidelines to consider when asking yourself if it's the right time to set up a joint account with your co-holder of choice:

Do you have an honest, trusting relationship with this person? Are you and your co-holder currently financially stable or unstable? Are you both employed? Are either of you in debt? Does either of you anticipate a large expense (purchasing a house, car, etc.) in the near future?

Answering questions like this honestly and thoroughly is truly the best method of making an informed, careful decision.

You should also keep in mind that starting a joint account with another person does not necessarily have to be "all or nothing". You can continue to maintain individual accounts without committing all your wealth to the shared pool. Alternately, you can set up the account to provide each holder with a set "allowance" each month which they are allowed to spend as they wish.

Read our helpful guide outlining some key life milestones which are often chosen for combining finances.

How to Open a Joint Account

The process of opening a joint account can vary depending on the bank or other financial instition you choose. However, the process is typically pretty straightforward. Often, it does not vary significantly from creating an individual account, except for the fact that the "joint account" box must be checked on the initial paperwork. It may also be possible to convert an existing individual account into a joint account by simply adding another holder.

Some banks will allow you to set up the joint account online, while others will require an in-person visit. In all cases, both partners will have to verify their identity via providing their social security number, address, and photo identification.

Different types of joint accounts - for example, joint checking and joint savings accounts - are available, so both account holders should decide together what best suits their needs. You should also always consider any perks, bonuses or other features which your chosen bank may provide when you set up and maintain a joint account with them.

Keep in mind that, while the consent of both parties is generally required to open the account, not all banks will require this to close the account. The majority of joint accounts can be closed unilaterally by either one of the holders, without the other one having to agree or even finding out at all. Make sure to understand your bank's policy regarding joint account closing before choosing them.

If you think that a joint account is right for you, then Zeta is happy to help you get started.

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The Zeta Joint Card and Joint Account is offered by Radius Bank, Member FDIC. Zeta Help Inc. is a service provider of the issuing bank. All deposit accounts of the same ownership and/or vesting held at the issuing bank are combined and insured under an FDIC Certificate, up to $500,000. The Zeta Joint Debit Card, provided by MasterCard, may be used everywhere where MasterCard Debit Cards are accepted.