A joint account is a bank account exactly the same as a regular account. The only difference is that the joint account is shared by two or more individuals with the same account privileges. Any member with their name on the joint account has access to all the funds in the account, can withdraw from the account as well as deposit money in it. The point of having a joint account is to have equally shared rights and responsibilities. Hence, one should only open a joint bank account with someone trustworthy. All activity in the account is recorded and can be viewed by all the members of the account. Typically, married couples have joint accounts, business partners, as well as aging parents who require their children to take care of their finances.
Advantages of a joint account:
• A joint account allows you and the other signatory members to have easy and convenient access to all the funds, making life easier since all the transaction happen in one place; whether money is withdrawn or being deposited.
• In the event of death of any member of the joint account, the designated survivor continues to have full access to the funds. This helps to avoid financial and legal complications when the survivor needs to access funds.
• One of the biggest advantages of a joint account is the ability to help the old parents or any senior family members to manage their money, especially when they become unable to do so on their own.
• With a joint account since you can monitor all your collective activity, it gives you a much better understanding of combined cash-flow. Thereby, you can have a clearer understanding of spending as well as saving patterns with the other members of the account.
Disadvantages of a joint account:
• Though having a joint account makes financial transactions easier and convenient, but at the same time, it could be quite unpleasant and risky in a situation of divorce of a couple sharing the account or separation among the members. You may lose all your funds since both or all the account holders have equal rights to spend or withdraw the funds.
• Sometimes you may not want to make it known where you spend money. In that case, with a joint account, you lose your financial privacy as joint account allows access for each member to know about all the transaction details.
• In case of any loan default, it is the lender’s right to retrieve funds from your account. If a wife has been using the husband’s credit card a lot and the husband has not made any payments on his credit cards for several months and the credit card is at the same bank as their joint account, then the bank could theoretically pull from the joint chequing account to pay the debts.
• Due to equal rights towards the joint account for all the embers, any member have the right to withdraw any some or all of the funds regardless of who deposited when into the account.
To open a joint account, one must complete an application form with personal details of all the account holders. Some banks may also request proof of address and identity in the form of bills, passport or driver’s license.
