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Joint Savings Account: Banking Guide

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A joint savings account is owned by two people, allowing each party to deposit and withdraw funds. Joint savings accounts can simplify things for people who share their finances. But you should also keep some things in mind before opening a joint savings account. Here’s what you need to know. If you’re looking for ways to save more money or plan out your finances, consider working with a financial advisor who can create a whole financial plan on your behalf. 

What Is a Joint Savings Account?

A joint savings account works largely the same as another savings account you might already have. The main difference with a joint savings account is that there are two account owners instead of just one. Both co-owners have full access to the account and can deposit and withdraw funds without permission from the other account owner.

Joint savings can simplify things in some cases, such as with couples who are married or in a domestic partnership. They might share expenses, and both have full-time incomes. Thus, they might both have money to contribute to both ongoing expenses as well as savings goals.

For instance, perhaps you and your partner are saving for a down payment on a house. If you have joint savings account together, it will be easier to know if you are on track to meet your goal or to set money aside together for the same purpose.

Benefits of Joint Savings Accounts

Other than making it easier to track your savings goals, there are a few benefits of opening a joint savings account. Here are some others to consider:

  • FDIC-insured up to $500,000: The standard amount of FDIC insurance per person is up to $250,000. Since joint accounts have two owners, they’re FDIC-insured up to $500,000. If either owner already has accounts where they will open the joint account, those amounts are subtracted from the $500,000 amount.
  • Meet minimums & get better interest rates: Some savings accounts might have minimum account balances; with two incomes, it should be easier to reach any applicable minimums. Some also pay higher interest rates for higher balances.
  • Transparency: If there is any worry about how the money will be spent in your relationship, joint accounts can help make things more transparent.

Joint Savings Account Alternatives

joint savings account

While joint savings accounts have their benefits, they aren’t right for every couple. For example, one partner might have significant amounts of debt, or perhaps one partner has a much higher income than the other. Another possibility is that one partner tends to spend beyond their means. Whatever the reason, there are scenarios in which joint savings accounts won’t be the best choice. In that case, these alternatives might be better options.

Shared Savings Goals

If you don’t want to combine all your savings, you could agree to have a joint account only for a specific savings goal. Maybe you are saving for your wedding, and you agree that you should both contribute. But you feel other savings goals, such as saving for a car that only one partner will drive, should be kept separate. In this case, you can open separate savings account meant only for the savings goals you will share.

Separate Accounts

In some cases, it may simply not make sense to keep your savings comingled. Perhaps you don’t have shared savings goals, or each partner’s finances are radically different. While this forgoes the benefits of joint savings accounts, it doesn’t have to be permanent. Situations and goals change, and perhaps it might just be that it is better to keep your savings separate until you are on the same page.

How to Open a Joint Savings Account

The process of opening a joint savings account may vary slightly depending on the circumstances. However, you should have some documentation ready in case you need it. Here are the things you should have ready if you’re looking to open a joint savings account quickly:

  • Valid driver’s license or passport
  • Social Security number
  • Proof of address
  • Information on your checking account or debit cards, such as account and routing numbers

You may decide to open an account online or physically visit a branch. If you go the latter route, both people should be at the bank when opening the account. If you want to use one of your existing savings accounts, adding the other person as an authorized user may be possible instead of opening a new account. Ultimately, the overall process will depend on the bank you choose.

The Bottom Line

joint savings account

A joint savings account is one with two account owners, allowing each to deposit and withdraw funds. This arrangement can simplify your finances and help you meet deposit minimums. But it can also create problems when your finances don’t align with your partner’s. In this case, you may want to only share certain savings goals or keep your finances entirely separate for the time being. When you’re ready, opening a joint savings account should be nearly as simple as opening one on your own.

Tips for Saving Money

  • A financial advisor can help you work through your banking needs and put together a plan that works for your unique situation. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goalsget started now.
  • If you plan to open a brand-new savings account, be sure to check SmartAsset’s list of the best savings accounts. Some savings accounts are better than others; for example, some have no minimum deposit and have attractive interest rates.

Photo credit: ©iStock.com/Delmaine Donson, ©iStock.com/PeopleImages, ©iStock.com/Antonio_Diaz

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