Should You Have Joint or Separate Bank Accounts?

Evaluate the Pros and Cons of Merging Your Bank Account With Your Partner

Illustration showing the pros and cons of joint bank accounts such as streamlined legal affairs and the danger of a messy breakup

The Balance

When you are in a committed relationship, you tend to share many things together, including your home, possibly a pet, and in many cases, your finances. One of the most important questions to consider with your partner is how household finances will be handled when there are two people at the helm, versus one.

For example, that may mean taking shared responsibility for paying bills or developing joint savings goals. It can also mean combining paychecks or other recurring income, such as tax refunds and cash gifts, into a single bank account.

Whether you’re a newlywed or in a committed partnership, deciding how to manage your bank accounts should be a top priority. In this guide, you’ll learn what to consider when deciding whether or not to open a joint bank account, as well as the pros and cons of each choice.

Benefits of a Joint Bank Account

For many couples, a joint bank account is the ultimate symbolic gesture of their financial union. 

According to the 2019 Love and Money survey from TD Bank, which surveys married couples specifically, the majority (57%) share bank accounts, while two-thirds share at least one credit card. 

In recent years, younger generations are becoming more hesitant to share their finances. According to a recent survey from Bank of America, 28% of millennial couples say they keep their finances separate.

Having one bank account offers a number of benefits. For example, sharing an account allows each partner access to money when they need it. Joint bank accounts usually provide each account holder with a debit card, a checkbook, and the ability to make deposits or withdraw funds. If your bank provides it, each of you would also have online access to account information and tools, which can simplify paying bills and other shared financial tasks.

Some legal affairs are also streamlined with joint bank accounts. In the event that your partner passes away, in most cases, the other parter will retain access to the funds in a joint account without having to refer to a will or go through the legal system to claim the money. This happens if the account has what is termed as a “right of survivorship,” and it depends on the account and state law. If the joint account does not have this designation, the share of the account belonging to the deceased owner will be distributed through their estate.

Talk to your bank about how survivorship works in your state before opening individual or joint bank accounts if you're concerned about what would happen to your money if one of you were to pass away.

Finally, one of the main advantages of a joint bank account is that there's a smaller chance of encountering financial “surprises” when all money goes into and comes out of one account that both of you can see. Couples with joint accounts may find it easier to keep track of their finances because all expenses come out of one account. This makes it harder to miss account activity, such as withdrawals and payments, and easier to balance the checkbook at the end of the month.

Drawbacks of a Joint Bank Account

While sharing a bank account can simplify your money management system, there are some potential downsides too. For example, some couples may feel a loss of financial independence with a joint bank account. With separate accounts, each partner maintains an individual degree of freedom over their finances. In other words, there's no "checking up" from the other partner because transactions are private, rather than shared.

However, sharing a joint bank account can sometimes cause issues in a relationship when partners aren't communicating about their account activity, or worse, keeping financial secrets. 

A recent survey from financial services company Varo Money, Inc. revealed that many couples prefer to maintain separate bank accounts from their partner, or sometimes have both a joint account and separate accounts. While 77% of respondents shared fiscal responsibility with their partners, nearly half (45%) maintain separate bank accounts from their partner. Among those with joint bank accounts, 23% also keep a separate personal account. And when it comes to financial secrets, one in five respondents reported having a secret bank account or credit card their partners do not know about. 

Problems may also arise when one partner in the relationship has outstanding debt, such as student loan debt, credit card debt, or even child support. If one of the account holders in a joint account owes money, a creditor can try to collect funds from the joint bank account.

To avoid resentment, couples should discuss their separate debts in detail before deciding on how to share their financial load.

A joint account can also be problematic if the relationship ends. If the couple decides to part ways, the funds in a joint account can be messy to separate. Each partner has every right to withdraw money and close the account without the consent of the other, and one party can easily leave the other penniless. Separate bank accounts prevent that scenario and can allow for an easier break that often doesn’t involve a long fight to fully separate the finances.

Using Separate Bank Accounts

Discussing finances frequently and deciding on a plan will lay a strong financial foundation for both you and your partner. Couples who revisit their decision every so often may also find success by making sure their strategy still works for them.

If you and your long-term partner prefer to keep separate bank accounts, you should have a discussion about it as early in the relationship as possible to establish a financial plan for the future.

If you do choose to have separate bank accounts, financial responsibility does not vanish for either partner. You still need to work through how bills will get paid, who is responsible for which payments, and have frequent discussions to reconcile your accounts and finances. You might also still choose to keep one or two joint accounts to save toward specific financial goals together, such as buying a house.

Committed partners can choose to maintain separate accounts and also open a joint account in which they deposit a portion of their income that they both agree on. This way, you both enjoy the benefits of a joint account while still maintaining the independence of divided finances. Couples can also choose to keep separate checking accounts and start a joint savings account for vacations, down payment for a home, a kids’ college tuition, or retirement.

Setting Financial Goals as a Couple

As you and your partner decide on whether to establish a joint bank account or keep separate bank accounts, you may find that it’s wise to set financial goals together in either scenario. When having financial discussions, some questions to ask include:

  • What’s the approach if we pay off the debt we accumulated together or separately?
  • What’s the approach if we make investments?
  • How do we manage everyday spending on household purchases?
  • How will regular household expenses, such as the mortgage or utility bills be divided? 
  • How do we handle emergencies?

It’s important to have detailed financial discussions with your partner frequently to determine what makes sense. While you may start with a financial blueprint when your relationship first becomes serious, it’s important to come back to that blueprint and update it. This way, you can frequently discuss spending and budgeting as a couple, ultimately finding financial stability in the long run.

Frequently Asked Questions (FAQs)

Are joint bank accounts frozen when someone dies?

Joint bank accounts are typically established with a "right of survivorship." This means that, if one party dies, the surviving party (or parties) inherits the decedent's share of the account. In other words, a couple's joint bank account won't be frozen if one of them dies because the surviving spouse has the right of survivorship.

Who pays the tax on shared bank accounts?

If you are married and you file jointly, shared accounts don't complicate taxes at all because the couple will combine all of their finances at tax time anyway. When owners of a joint account don't file taxes together, the tax documentation will be sent to the primary account holder, who then arranges for joint owners to share the tax burden according to their share of the account.

How are joint bank accounts handled during a divorce?

Both parties have an equal claim to joint bank accounts during the divorce process, regardless of who deposited or withdrew more before divorce proceedings.