The Ins and Outs of Opening a Joint Bank Account

Is combining accounts the right choice for the two of you?

Updated 02/20/18

Stocksy

While planning a wedding is probably at the forefront of your mind throughout your engagement, there’s something else you should be planning for, too: your marriage. You’ve got decades of life together ahead of you, so it’s important to take a little time between the cake tastings and dress fittings to lay the groundwork for the future.

If there’s one thing couples have a hard time discussing but really need to address together, it’s finances. From your monthly budget to savings accounts (and don’t forget college savings if you plan on having children!), money is one thing that’s never going to go away, so deciding how you and your partner will handle your finances is key. Many couples opt to combine some (or all) of their finances into joint accounts, but how do you know if it’s right for you? We asked the financial experts from Merrill Lynch and Bank of America Better Money Habits to walk us through what a joint account really means for you.

What Are the Reasons You Should Combine Accounts? How Can a Couple Use Joint Accounts to Their Benefit?

Joint accounts are a great way to give you and your partner a transparent view of how your money is being spent. By both having access to your accounts, you can save toward shared goals (like a new home or a vacation), as well as keep track of household expenses like utilities or groceries. With account activity visible to both of you, there’s less temptation to splurge because you are both on the same page.

A joint account can also help you qualify more quickly for your bank’s rewards programs. For example, growing your qualifying savings and investments in a Bank of America account can qualify you for discounted home and auto loans, $0 Merrill Edge stock and ETF trades, and credit card rewards bonuses.

What About the Reasons Why You Shouldn't?

Of course, combining accounts isn’t always the right answer. Keeping separate accounts can be helpful if you and your partner are in different places financially. For example, if one partner is carrying a lot of debt or has mismanaged money in the past, a degree of separation can provide a sense of security for the other person (at least until the debt is paid off).

Should You Combine All of Your Accounts or Keep Some Separate?

No matter what type of account you’re considering (savings, retirement, credit cards, etc), first and foremost it’s important to talk with your partner about what makes you both comfortable. For example, some couples find joint bank accounts easiest to deal with. However, if you've been managing your money for years on your own, you may prefer to keep an individual account for everyday expenses—and to consider contributing to a joint account for larger purchases and regular payments like rent or a mortgage.

One challenge with separate accounts is figuring out how to manage those shared expenses. Determining who pays for what can be a point of stress for couples. If you decide to maintain separate accounts, be sure to clearly determine how those shared expenses will be covered, whether from a single joint account or by establishing how much you each will contribute. Clarity in this instance is absolutely essential.

How Should a Couple Go About Combining Their Accounts?

If you and your partner decide to combine your finances, opening a joint account is a similar process to opening an individual account. You will both need to provide information and identification. You may also be able to add one partner to the other’s existing account instead of opening an entirely new account.

As co-owners of a joint account, it’s important to know that both of you will have access to withdraw funds without the other’s permission, and each of you will be able to talk to the bank about the account without the consent of the other.

What Do You Need to Know About Your Own Finances (And Your Partner's!) Before You Consider a Joint Account?

Many couples may put off talking about money before marriage, but that lack of knowledge can be pretty risky; past mistakes can affect your future together. Before you walk down the aisle, get to know each other’s financial situation—like how many credit cards each of you have, your specific spending habits, any debt you have, and even spending indulgences.

Talking about money should be a healthy, ongoing conversation; there’s no reason to wait for something to go wrong. Set aside time every month to delegate money-related tasks, talk about future financial decisions and see the progress you’ve made together toward accomplishing your goals.

What Kind of Impact Will Combining Accounts Have on Your Future Finances?

When you marry someone, you may also be taking on their debts, so conversations around this topic are crucial. Begin by tallying up what you own—and owe—accounting for assets including savings and retirement accounts, as well as liabilities like student debt, loans, credit card balances and possibly a mortgage. You may be able to help pay down your partner's debt more quickly. But even if you can't, it's better to know about any surprises that could have an impact on your own finances down the line. For instance, a bad credit score could become a roadblock if you apply jointly for a mortgage. After everything's on the table, start talking about where you hope to go from here.

You might consider opening a joint account but keeping your separate accounts, as well. If so, talk to your bank about linking both of your individual accounts to the joint account. Linking lets couples maintain independent control of their checking accounts while sharing a joint account from which they can pay bills, manage household expenses, contribute savings, and handle other daily financial responsibilities. This way, you have a shared space to deposit money for mutual expenses or to save for future goals.

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