What You Should Know Before Setting Up A Joint Bank Account With Your S.O.

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Getting a little cozy with your S.O. lately? No, we’re not talking about snuggling up on the couch and watching that show you tell your friends you just love seeing together. We’re talking about money. At some point in your relationship, if it’s serious enough, you might consider setting up a joint bank account. But before signing on the dotted line, there are some things you need to know.

1. Know what you’re signing up for.

You probably already know that setting up a joint bank account means that you’re sharing this account with someone else. What you may not know is that when you sign up together, you need to deal with every situation — like overdraft fees and fraudulent activity — together. The same goes for general spending and managing the account. Also, be aware that you could inherit the entire bank account or lose everything if your partner passes away. Basically, there are a lot of considerations and obligations to take into account so read the fine print.

2. Decide on what type of joint bank account you want.

Joint Tenants With Rights Of Survivorship Account — This is one of the most common types of joint accounts, and it offers equal ownership to each party. If one party dies, 100 percent of the balance is automatically left to the surviving parties.

Joint Tenants In Common Account — This type of account offers unequal ownership, meaning that one party is the “main” account holder while the other parties have access to the account only as long as the main account allows it. If you’re kicked off the account or the main account holder dies, the remaining parties very rarely are granted funds. Instead, the money goes to the main account holder’s estate, will or closest living relatives.

Tenants By The Entirety Account — This type of account offers equal ownership to all parties, but requires each party to sign off on every transaction. That means that if your boyfriend wants to go out and buy ice cream, you’ll have to have your phone at the ready for when your bank texts you saying “Do you want to approve this?”

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3. Weigh the general pros and cons.

Pro: You can pool your funds together into one seamless experience.

Con: If one party overdrafts or mismanages the account in any way, everyone is liable, and their credit scores could be affected.

Pro: Most joint accounts offer double the deposit insurance protection (in case your bank tanks) than if you have a single account. For example, a single account owner may have $100,000 worth of insurance whereas a joint account could have $200,000. Banks and contracts vary, so this isn’t always the case, but it’s pretty great when it is.

Con: If one party unilaterally drains the account, all other parties typically have to seek legal counsel in order to resolve the issue. There is rarely individual protection in these cases.

Pro: If you pay bills together (and we assume you already do if you’re ready to sign up for a joint bank account), you could save time by paying them from one place or having to do the math on who owes who.

Con: Signing on with another party who happens to have poor credit? Once you sign onto a joint bank account with this person, you’ll be “co-scored,” which means that your co-account owner could pull down your credit.

4. Know when to get out…if you need to.

Depending on your contract, you may be able to simply opt out when you’d like, but in other cases you could have to go as far as to sign paperwork relinquishing your rights to the funds. Some banks and contracts require you to close the account altogether if even one party would like to opt out. If you want to leave the joint bank account, you also need to figure out how much of the available balance is yours to take with you. It’s important to keep every transaction documented so that if you have to, you can break down the math and figure out how much of that money is yours.

Takeaways

Hey, things happen. People break up or just choose to go back to handling their money separately. Keep track of your own money…just in case. You may be in *love* forever with your S.O., but you gotta take care of yourself financially, because at the end of the day, you’re responsible for yourself. There’s no harm in keeping score with your joint bank account co-holder. That’s all we’re saying!