When you open a new savings account or checking account at a new bank you’re automatically listed as an authorized user of your account. If you want to share your access to your account with one or more people that is what’s known as a joint account. Anyone you list as an account holder will have complete access to your account which includes writing checks, making deposits, and withdrawing funds. Joint bank accounts are usually opened by married couples, business partners, parents/children, or other close connections. You can choose to restrict access so checks need two signatures instead of just one.
A joint account can be risky if either you don’t know the person well enough or you don’t know their spending habits well enough. There’s added convenience to joint accounts though. Married couples will sometimes have a joint account but also separate accounts. Sometimes the elderly will open joint accounts with their children so their children can help them pay their bills if they’re forgetful.
Joint accounts usually have a right to survivorship which means if one of the account holders die, the remaining balance of the account is left up to the surviving account holder. Sometimes there are restrictions or waiting periods to this rule. If you do open a joint account with an individual it should be somebody you trust completely with your money. There also needs to be an understand of what the account should be used for. Is the account just for everyday bills or can the money be used for other luxuries? This is something that should be determined before you open your bank account.
Just because you’re married doesn’t necessarily mean you have to open a joint account. Every couple is different and you need to decide what the pros and cons of having a joint bank account are. If an individual has substantial debt that’s a consideration that needs to be taken into account when opening a joint account. Creditors view joint accounts as if they belonged solely to the individual in question, so funds can be taken to repay debts even if the other account holder has nothing to do with the debt. Any account holder can withdraw all the funds in the account at any time so above all else you need to have complete trust in someone you’re opening a joint account with.
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