How to Close a Joint Bank Account
Joint bank accounts are those that two people share. They make it easy for couples to manage their money, as both individuals have full access to the account and can deposit or withdraw funds as needed.
That being said, closing a joint bank account when it no longer serves you is a financially smart and relatively painless activity. Understanding when and how to close a joint account can help you terminate yours without hassle.
Reasons to Close a Joint Bank Account
Terminating a shared account makes sense if you have an unresponsive or uncooperative co-owner on the account, or simply no longer need it (your banking needs changed or the relationship ended, for example). In these scenarios, it may be tempting to leave an account open and stop using it. But closing your joint account as soon as possible can protect you in several ways:
- Prevent penalties: Closing a joint bank account prevents the co-owner from using the account irresponsibly and incurring overdraft and other fees. If you leave the account, the co-owner could try to spend money in excess of the balance. If the bank pays the transaction on your behalf, the account balance will go negative and you could incur an overdraft fee. You’ll have to bring the account balance to zero to close the account.
- Minimize fees: You also put an end to monthly maintenance fees and inactivity charges when you close a joint bank account. This way, you're not paying for something you’re not using.
- Reduce legal liability: Even if you’re the only one actively using the account and you trust the other person, joint account holders technically own funds in the account. If another account holder gets sued because they have unpaid debts or an automobile accident, for example, creditors can potentially take your money.
- Make a clean break: If a relationship ends, you might want to put the past behind you. Closing an old joint bank account can provide emotional relief and eliminate unwanted reminders.
- Revoke full shared access: Joint accounts generally allow each account to move money or close the account. As a result, one individual can spend the money in an account without approval from others. That’s convenient for busy families and business partners who want to operate efficiently, but things can get complicated when partnerships end. Closing a shared account can provide both owners with financial independence from one another.
Before you withdraw money or close an account, determine how other account holders may react if you move forward without their input.
Closing a Joint Bank Account
The process for closing an account depends on your bank. While some banks require both account holders to provide their consent to add or remove a person from a joint account, most banks allow any account holder to close a joint account individually. Some, however, limit you to less convenient methods of closure; reading your account agreement can help you identify the right approach.
Account Closure Methods
Your bank's account agreement will spell out how you’ll need to submit instructions to request a closure. You may be able to close a joint bank account in one of several ways:
- Online: Some banks allow you to close a joint account online, either through an automated process or by messaging the customer service department while logged in to your account. Depending on the bank, both account holders might be asked to log in separately to request the closure.
- Mail: Other banks take instructions in writing (with one or more original signatures required).
- Phone: It may be possible to call a customer service representative and close your account verbally.
- In-person: The most cumbersome requirement is when one of the account owners needs to visit a branch in-person and provide a signature to close the joint bank account. If that’s the case, bring an ID and allow for plenty of time to complete the process.
It generally only takes one person to close a joint bank account, and that person can be either co-owner.
Step-by-Step Instructions to Close a Joint Account
Terminating the account can have consequences. If things go badly, you may miss payments, bounce checks, and pay unnecessary fees. To avoid costly surprises, follow this checklist for switching banks:
- Bring your account balance to zero: Deposit funds to make up for any shortfall, or decide how you’d like your bank to distribute any money left in the account upon closing. Banks can generally wire money and mail checks, or you can transfer the money out yourself.
- Stop withdrawals: Prevent expensive overdrafts and delays in closing your account and ensure that all outstanding checks have settled. Likewise, cancel any automatic bill payments. Research the past 12 months of activity so you don’t forget anything. Destroy debit cards and checks linked to the account to prevent mistakes in how you close your joint bank account.
- Get your new account ready: Open another account, if you don't already have one. You’ll need to be able to receive payments, spend money, pay bills, and store cash in the new account. It could take up to one month after you redirect your payments for them to switch over successfully to the new account, so don't rush to close the old account until then.
- Ask your bank to close the old account: Find out what the requirements are—who can request the closure and how to communicate your request, for example. Then, bring your ID and any necessary forms and submit your request to close the joint account.
Avoiding Legal Trouble
Because each account owner typically has full access to the money in a joint bank account, anybody can empty an account without permission from the other account owners. That can cause two key problems:
- You might not have a legal right to the money you take: This might be true even though your bank gives you the authority to withdraw the money and close the account. For example, a divorce decree might say that funds belong to an ex-spouse.
- The co-owner can drain your account without your knowledge: If you don’t trust your joint account holder, speak with a local attorney to discuss options to protect yourself.
Communication can go a long way toward reducing your legal bills. If possible, discuss how to split funds from a joint account so that things don’t get any worse.