Joint Bank Accounts for Unmarried Couples
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Can Unmarried Couples Open a Joint Bank Account?
How Joint Bank Accounts Work
Benefits of Having a Joint Bank Account
Easier money management. If a couple is trying to manage their finances together, such as paying bills or working towards a savings goal, having their money in one place can help simplify managing their financial lives. More accountability. When trying to meet a savings goal, some may find it helpful knowing their partner can see how much they’re spending, which may hold them more accountable. Extra FDIC insurance. When a couple opens a joint bank account, they receive up to $500,000 worth of insurance through the Federal Deposit Insurance Corporation (FDIC), instead of the $250,000 worth of FDIC insurance they would get with individual accounts. Increased transparency. Couples looking to strengthen their bond may appreciate the level of trust and transparency that a joint bank account brings to the table.
Risks of Having a Joint Bank Account
Less control. When a couple combines their money — even if it’s just some of their money — into a joint bank account, they do lose some control over how that money is spent. This can cause relationship issues if the couple doesn’t agree on how to spend the money — especially if one partner spends more than they contribute. Decreased privacy. Some people may not appreciate their partner being able to see all of the purchases and transfers they make from the joint account. Creditors can seize the money. If one partner owes a debt, creditors, collection agencies, and even government agencies like the IRS may be able to garnish money from the joint account. Increased communication needs. If the couple doesn’t communicate well about the comings and goings of their joint account, it can be easy to accidentally overspend and get hit with an overdraft fee.
Alternatives to Consider
Make a plan. Each party needs to know who is covering what expenses, how much is generally being spent, and what they’ll be expected to pay for on their own. Creating a joint budget and spending plan can help ensure that there are no unpleasant surprises that can lead to arguments. Create a system. Whether the couple wants to split bills, pay each other back for groceries, or set aside money each month for a shared savings goal, they need a system in place for doing so. They should pick a time each week to sit down and hash out who owes who what and to make sure they’re on the same page. Choose how to transfer funds. The couple should choose a way to transfer each other money for shared expenses. This can be done via a bank transfer, with an app like Venmo or Splitwise, via check, or with cash.
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