Pros and Cons of Joint Accounts for Married Couples
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Date: November 3, 2016
Marriage joins two people at the hip financially – both have a right to a share of all marital assets. This can make the question of whether to open a joint account with your spouse somewhat moot, at least if the marriage breaks up, because both spouses are entitled to a portion of the money regardless of whose name is on the account. But some practical considerations apply to maintaining a joint account as long as your marriage is healthy.
Money Management Made Easy – or Much Harder
A joint account’s balance will likely be higher if both you and your spouse regularly deposit your earnings into it, in contrast to depositing your own paychecks in separate accounts in your own names. A joint account with a healthy balance should mean less risk for incurring overdrafts and the resulting fees. Maintaining a higher balance can also cut down on those annoying monthly service fees, saving you money. And, it's just plain easier to write checks for household expenses from one dedicated account.
However, having easy access to the whole pot of marital money can be disastrous if one of you is a spendthrift or is fiscally irresponsible. You might find there’s not enough left in the account to pay the mortgage or rent when its due — particularly if you’re earning just enough to get by — if one of you is constantly tapping into the account for this or that.
Joint Accounts are Transparent
Marriage might be all about sharing and sharing alike, but some spouses chafe a little when they have to account for each penny they spend. Accountability and mutual discussion make sense when buying big-ticket items, but even small and inconsequential purchases made by debit cards will show up on joint account statements. Your spouse will know exactly how much you spent on that pair of to-die-for shoes and may not agree they were worth the price. Keeping a joint account may be uncomfortable and cause problems if being able to spend in relative anonymity is important to one or both of you.
You’ll Share Overdrafts, Too
If your spouse overdraws a joint account, you’re just as responsible for the financial penalty — and for restoring the balance — as he is. And some banks inform consumer reporting agencies of overdrafts, particularly if the bank ultimately closes the account because of them. This can leave a black mark on your credit as well as his, making it difficult or impossible for you to open an account in your own name.
Joint Credit Card Accounts
Most of the same rules apply to joint credit accounts. If a lender can’t collect from one spouse, it can pursue the other’s assets and income for payment. If the account isn’t handled responsibly, and your name is on it, your credit score will be damaged. The flip side is that if each of you have a number of different credit cards in your own names, that’s a lot to keep track of each month, and oversights can happen. Consolidating credit cards might make life easier, provided you and your spouse are on the same page about how you want to handle your finances.