Pros and Cons of Joint Checking Accounts

Pros and Cons of Joint Checking Accounts

Marriages are made in heaven but when it comes to money matters, it becomes a touchy subject. Because of this issue, lot of fights ensue resulting in divorces too. Of course every couple wants to make their marriage work and wants to avoid these petty matters. Therefore, joint checking accounts are operated. Let's find out about the plus and the minus side to this favorable alternative.
Defining joint checking account, it usually involves two people operating the account for saving or for specific projects. It is also called a safe haven for people who are less risk prone. With such an account, people find it easy to manage their money by getting to know about each other's expenditure. While managing this type of account couples or friends can set up a clear cut budget, target on how much money should be saved every month and can also opt for certificate of deposit in order to gain interest on the savings. Many banks have a variety of joint checking accounts where minimum opening deposit is as low as $100. In these type of accounts you can avail free mobile banking, online banking, account alerts and free online bill payment.

Even though managing this account is difficult at times when one of the partner tends to be extravagant, but with honestly talking about financial matters and future savings this issue can be solved.

Advantages of a Joint Checking Account

Prevents Overdraft
Through this account the risk of falling into an overdraft is avoided. With this account both of you can keep a tab on the finances and alert each other if the spending is huge and savings are getting exhausted easily. If one of you tends to spend a lot then it's wise to opt for overdraft protection service which most of the banks offer free.

Helpful in Paying Bills Online
Through this account one can pay bills online without falling into hassles of checkbook and credit cards. Through this both of them can check on their transactions and curb unnecessary bills.

Surviving Spouse
In case of death of either one the joint account is not frozen or closed unlike separate account. So the surviving partner can still have access to the account and operate it without any problems.

Helps in Learning Money Management
Joint account serves as a boon for people who spend without thinking. With a financial consultant in home advising you to start saving I think it works pretty well. It makes you responsible for your spouse and your future. It instills a sense of humility where you are not compelled to save money but you do it out of your own free will.

KISS Approach
It helps in keeping things simple which in turn reduces difficulties you encounter in maintaining separate accounts. With separate accounts, though it seems an easy task but with joint account you can plan for other investment opportunities like buying shares, investing in mutual funds or other options too.

Transfer your Savings
Through this account one can transfer their savings which are idle and not earning any substantial interest to avenues like certificate of deposits where the money is locked for a term and also earns interest. This is a better option for people who are averse to other risky options.

Equal Rights
Operating this account gives equal rights to its owners where both the partners get an ATM card and Debit cards. Both of you have access to the money in your account. In this way both feel in control of their savings and expenditures.

Division of Money
In case you hold separate accounts you have privacy over matters like savings from income and expenditure. But in case of an expenditure which is mutual like going for a holiday, purchasing Christmas gifts for family, division of expenditure is not possible. Therefore joint accounts serve better purpose in solving this issue.

Disadvantages of a Joint Checking Account

Reconciliation Difficulties
During month end reconciling the checkbook is necessary so as to check on the balances. But it becomes a humongous task if one of partner lags behind or does errors while recording any expenditure in the checkbook.

Transferring Money
It is a nightmare if one of the partner transfers all the money out of the joint account without prior knowledge to the other. This can create complications in terms of mutual trust.

Handling Money Woes
Differences can easily arise when one of the partner is the primary account holder and the other one is the secondary account holder. The primary account holder is given more authorizations than the secondary one and this creates resentment issues on part of both the spouses.

Sharing Troubles
While bifurcating any expense problems may arise as to who should pay the bill. Even in case of a partner taking a loan both of them are jointly liable to pay. This creates tension between the partners and makes joint accounts less preferable in this condition.

Less Privacy
With this account privacy is zero and even though it can compel partners to be responsible to each other it can hamper the delicate relationship too. As everything in the account is like an open book, any debt, expenditure or failed investment can complicate the matters further.

Opening a joint account is a first step in starting your new life. Everyone expects smooth going and when they encounter glitches it hampers their relationship. But with little patience and understanding every matter can be solved. Operating a joint account is a personal issue and this matter too should be discussed thoroughly before taking any step. As every issue has certain disadvantages operating a joint checking account should not deter you from your decision.
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