Banking 101: What is a Joint Account?

A joint account is an account shared by two or more owners. Accounts that are commonly held as joint accounts include checking and savings accounts and can be useful when people are sharing expenses such as household or business bills or expenses. Joint savings accounts are often used when saving for a common goal such as planning a marriage, vacation, or buying a home.

Joint bank accounts are commonly held by married couples or family members such as a parent and child, but it’s possible for any two people to open a bank account jointly. Joint ownership status authorizes all those listed on the account to full use of the account and the shared responsibility for any payments, fees, or charges incurred.

The biggest difference between a joint account and an individually held account is that all the named owners on a joint account can have full access and control over the money in the account. Each account owner can have a debit card, write checks against the account, and make purchases. Funds belong to all named owners on a joint account and any owner named on the account can withdraw some or all of the money in the account or close the account, even if they never added money to it.

Many couples choose to hold a joint bank account as part of their financial plan along with individual accounts. Expenses like housing and utilities might be paid out of the joint account while other personal expenses are paid from individual accounts.

Joint Account Benefits

Joint account ownership can offer several potential benefits.

• Efficient and convenient way to streamline the process of paying bills without the extra steps of combining funds from separate accounts or trying to split bills and payments.
• Funds combined into one account might increase the daily account balance to help meet minimum balance requirements for benefits like avoiding monthly account maintenance fees.
• Joint account ownership can increase the amount of FDIC insurance coverage. An individual who owns an account with $500,000 would be insured for only $250,000 under the FDIC limits. The same $500,000 balance owned by two people would be covered in full, as each account owner would be covered up to $250,000.

Joint Account Pitfalls

There can be disadvantages to holding money in a joint account.

• The chance of overdrawing the account could be greater when two or more people are accessing money in the account.
• If one or more signers on the account has trouble staying within a budget, there could be more money spent from the account than anticipated and a shortfall when expected payments are due.  One way to help minimize the potential is to discuss large purchases with the other person before using the jointly held funds to pay for them.
• All owners on the account can see all account activity, no matter who initiated the transaction. If you aren’t comfortable with another person seeing how or where you spend money, a joint account may not be your best option.
• If parents have a joint bank account with their child, assets in the joint account could reduce potential awards for college financial aid.
• Adult children who have a joint account with aging parents could impact a parent’s eligibility for Medicaid.
• If one owner of a joint account has unpaid debts, creditors could go after the shared money in the account to satisfy those debts.
• Anyone named on the account can withdraw some or all of the money in the account or close the account, even if they never added money to it.

To learn about products and services offered by Enterprise Bank, please visit https://www.enterprisebanking.com. If you would like to speak to an Enterprise Banker about opening an account, we invite you to call us at 877-671-2265 or visit one of our convenient branch locations.