Combining funds with another person is a big step. Joint accounts are most often opened by newly-married couples but they can also be used for business partners, roommates, and friends. They are very convenient for tracking and paying shared household expenses and building up savings together.
Some of the ways a joint account differs from an individual account include:
Transparency and Access
- Every person named on the account has full access to all account funds at will.
- Each party will be able to discuss any transactions on the account with a bank representative.
- Neither party can remove the other person’s name from the account without permission.
- Either party may close the account.
Achieving Shared Goals
- Maintain a household budget.
- Work toward mutual financial goals.
- Set up alerts to notify you of transactions made by either party.
Risk and Reward
- The FDIC and NCUA provides $250,000 of federally backed insurance coverage per depositor
- If the account is mismanaged, both owners may be reported to credit agencies
- A lien, judgement, or garnishment in the name of either owner may be collected through a joint account.
- If one of the joint account owners were to die, the right of survivorship would be applied.
- If a college student shares an account, it may impact his or her financial aid status
If you intend to share an account with another person, be sure to communicate regularly about spending and saving habits. Set a time to regularly discuss expectations and limitations.
The staff at Mercer Savings Bank can help you evaluate your options and decide which type of account is best for your needs. Mercer Savings Bank has been serving the needs of your community for more than 125 years. Stop by one of our convenient branches or contact us today.