For many people, opening a joint bank account makes it easier to share financial information with family members. A joint account is any type of financial account that has at least two owners. For example, you can have joint bank accounts with your spouse or an elderly parent.
Although opening a joint account makes it more convenient to process certain transactions, there are also some risks associated with owning a financial account with someone else. Learn more about these risks to determine if you should pursue an alternative.
Potential Risks of Opening Joint Bank Accounts
When you open a joint account, you share ownership with the other account holder. This exposes you to the following risks.
1. Eligibility for Need-Based Programs
If you rely on need-based programs, such as Medicaid or the Supplemental Nutrition Assistance Program (SNAP), you must meet certain income and asset requirements. A bank account is classified as an asset, so your bank balance has the potential to prevent you from qualifying for need-based aid.
For example, let’s say the other account holder deposits $3,500 in the joint account. Assuming you’re under the age of 60, the SNAP resource limit for October 1, 2024, through September 30, 2025, is $3,000. The $3,500 deposit would put you over the resource limit by $500, which might put your SNAP eligibility at risk.
If you rely on need-based aid to make ends meet, you may need to find another way to share your finances with a spouse or trusted family member.
2. Privacy Concerns
When you share an account with someone else, they have access to information about your financial activity. For example, the other account holder can see every time you spend money on fast food or splurge on personal travel. If you don’t want other people to know your business, opening joint bank accounts may not be a good fit for your lifestyle.
3. Personal Disagreements
Even if you’re getting along fine when you open a joint account, you and the other account holder can have a disagreement at any time. If the disagreement is serious enough, the other person might decide to punish you by withdrawing more money than they’ve deposited, leaving you without the funds you need to meet your financial obligations.
Opening a joint account also creates opportunities for you and the other account holder to disagree about your finances. If you enjoy spending and your spouse prefers to save every penny they earn, for example, they may give you a hard time about your spending habits. These disagreements might lead to discord within your personal relationships.
4. Creditor Issues
In some cases, joint account holders can become liable for each other’s debts. For example, if one account owner stops making payments on a personal loan, the creditor could sue and get a judgment. If they continue to ignore their financial obligations, the creditor might be able to levy your shared account. A levy freezes the funds in the account, making them inaccessible.
Once a levy goes into effect, it doesn’t matter if you’ve deposited $10,000 into the account and the other person has only deposited $10. Until the matter is resolved, you can’t use any of your money to pay bills, shop for groceries or meet your other financial obligations.
5. Joint Responsibility for Account Activity
When you open a joint bank account, the bank holds you both responsible for all account activity. If the other account holder writes a bad check or commits some type of fraud, the bank is likely to close the account or charge exorbitant overdraft fees. It doesn’t matter if you had nothing to do with the suspicious activity, either. Since you agreed to equal responsibility, the bank may force you to pay the fees before you can use your debit card or make future withdrawals.
Alternatives to Joint Bank Accounts
In the past, opening a new joint bank account was one of the easiest ways to share money with a loved one. Now that you can access multiple payment platforms, however, there’s no need to open a joint account just to share your finances. If you need to reimburse a loved one for your portion of the rent or other expenses, you can easily use Venmo, PayPal or a similar platform.
Every time you make a transaction, you have the opportunity to document why you’re sending the other person money, so it’s easy to create a digital paper trail that proves you’ve been covering your portion of shared expenses.
If you trust the other person implicitly, you can also add them as an authorized user on one of your credit cards. Authorized users have the right to make purchases, but they don’t have the right to request a higher credit limit or make other changes to your account. As the main account holder, you’re responsible for making payments, so you don’t have to worry about an authorized user missing a payment and causing your credit score to drop.
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