It is common and natural to have a joint bank account with your partner. Although this might signify trust in your relationship and partner, it’s important to understand all aspects. Ensure the decision you have made is right for you and your partner.
Even if this sounds and looks great, it’s essential to narrow down and look at one question; what are the pros and cons of a joint bank account? Let’s see what works best for you!
A joint account is a perfect way to merge and grow your money towards common goals. It also helps couples to check on each other’s spending habits. It will help avoid unnecessary expenditure.
Simple Legal Process –
Unfortunate events do occur, and if one partner passes away, you will not go through a daunting legal process to access household finances. This helps to reduce the pain and worry one has to go through during hard times.
Transparent Expenses –
There are no secrets to things like online banking. You can see where his/her money goes. Something like this makes it easier to see where and how your partner is spending the money. This will make it easier when balancing checkbooks and paying bills.
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Saving On Fees –
Joint accounts help to save on fines and penalties imposed. Most financial institutions have a minimum operating balance. The minimum operating balance helps to waive fees. For example, if the bank requires a minimum operating balance of $1500, you can pull together the resources and reach the threshold fast.
Couples who don’t work or where one is working and one stays at home, feel this form of partnership is the best to share finances. This helps to equal out the financial power in a relationship.
Easy Bill Paying –
It is easier to write one check and have it come from a shared account. This applies to other bills and expenses. When money is shared, the worry of who is buying groceries or paying rent is a thing of the past.
No Privacy –
There is no privacy in this partnership. If you are one who overspends, then your independence is at stake. Any transaction made will instantly alert your partner. Still, you cannot decide to buy anything unless you consult. It is one reason why partners might prefer separate bank account.
Relationship Ends –
Everyone has heard stories of partners breaking up, and then one of them drains the bank account leaving the other without a single penny. Breaking-up is not a good thing especially if there are many things you have to divide. Now, add the stress of splitting your bank account. Better a separate bank account, maybe?
Could Affect Credit Score –
Getting married to someone has nothing to do with your credit score. However, once you open a joint account and one of you has a poor credit score, it will affect yours. To maintain your score, check the credit score of your partner before you open the account.
Tips on How to Maintain a Joint Account:
- You can manage this type of account if you consider your spending habits. If you are stingy to spend while your partner is a spendthrift, a joint account will not help to balance household finances. It will always be a source of tension.
- Decide on how you are going to divide the expenses. For example, you can agree on 50/50 or 30/70 depending on your income and that of your spouse. This makes sense and will avoid quarrels and fights.
- Have a chat on whether the account will be for saving or not. Also, set goals. It will not work if your partner wants to save to pay the mortgage and you want to visit all destinations in Europe.
- Understand when to keep distance if one of you has a big debt. In such a case, better to keep a separate bank account. The debts we are talking about are loans and credit cards.
- If one of you is paying for child support or maintenance fees, it is easier to keep separate accounts.
- Finally, research what is on offer. Not all banks allow you to hold each other jointly. All banks are not created equal neither should you just hop on to your existing bank.
The most important thing is for both of you to be on the same page from the start. These are general points to help you decide if a joint account is right for you and your partner. They are not conclusive and the answers will defer for everyone. Only you and your partner can decide what is best for you and your relationship. Teamwork is key! If you need help with your debt, please reach out to the certified credit counselors at Advantage CCS!