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Bank accounts held jointly versus Which is better for you, individual bank accounts or combined?

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  • With joint bank accounts, two or more owners manage deposits in an account.
  • Bank accounts are federally insured up for to $250,000 per owner. 
  • Joint bank accounts might be good options for common goals between couples or family members. 

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Managing money with another person requires a clear vision and perspective. The best joint bank accounts offer a great place to keep your money if you're making big life decisions with a partner or family member. But it won't always be the best choice for every person. 

If you're stuck on whether to open a joint bank account or keep your money to yourself, we'll walk you through what you need to know about joint accounts and individual accounts to decide what's best for you.

What is a joint bank account? 

A joint bank account allows two or more people to own a bank account. While you can open a joint bank account with anyone, usually, joint bank accounts are opened by couples or family members. 

One type of joint bank account that you may be familiar with is a kid's bank account. All kid's bank accounts must be opened as joint bank accounts because a minor is able to open one by themselves. 

What is the difference between individual and joint bank accounts? 

The main difference between individual and joint bank accounts is ownership rights. Each co-owner can deposit, withdraw, and make everyday transactions at any time.

Also, keep in mind joint bank accounts often have a rule of survivorship. This joint bank account rule states that if you open a joint bank account and one of the owners dies, the surviving owner may take full ownership of the account.

When you're choosing where to bank, you'll want to make sure the financial institution is federally insured by the FDIC or the NCUA. The FDIC and NCUA are government agencies that oversee financial institutions and keep your money safe if the institution shuts down.

Bank accounts are federally insured for up to $250,000 per owner. For example, joint banks account between two people would be federally insured for up to $500,000. Furthermore, $750,000 would be FDIC-insured if three people opened a joint bank account, and $1 million would be insured between four bank account owners. Meanwhile, individual accounts only secure up to $250,000 because there's only one owner. 

However, with more bank account owners, an account can become more difficult to manage. That's why it's most common to open a joint bank account with just one other person.

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Advantages and disadvantages of joint bank accounts

Is it better to have a joint or individual bank account? 

Deciding between a joint bank account or an individual bank account will boil down to how you use the account and your goals. If you plan on using the account for everyday purchases, you and the other person will have to be on the same page. Otherwise, it'll be a hassle to oversee.

Overall, opening a joint bank account might be a good choice if you have a common long-term goal with a partner or family member. That way, you'll both be saving money for the same purpose.

It also may be a worthwhile option if one person primarily controls the account. For example, if a parent opens a bank account with their child and does most of the transactions, it won't be as challenging to manage.  

If you'd rather have more financial independence or save money for personal goals, like a hobby, an individual bank account may be more suitable. You won't have to justify miscellaneous purchases or communicate how things are spent like you would with a joint bank account.

You could also decide to open both joint and individual bank accounts as long they are both easy to manage.

How do you open a joint bank account? 

You'll have to apply online or at a branch location to open a joint bank account. If you have any questions or concerns, it might be better to schedule an appointment with a bank representative.

Opening a joint bank account will require two forms of identification for both account owners. Bring a driver's license, passport, or other government-issued ID. You'll also include personal information, like your Social Security number, date of birth, and address.

If you don't have a US ID or Social Security number, there are also banks and credit unions that make it easy for immigrants and non-US citizens to open an account.

If you decide to close a joint bank account in the future, keep in mind both account owners will need to be present and authorize permission to have the account closed.

Sophia Acevedo is a banking reporter at Business Insider. Sophia joined Insider in July 2021. She writes bank reviews, banking guides, and banking and savings articles for Personal Finance Insider. She is also a Certified Educator in Personal Finance (CEPF).Sophia is an alumna of California State University Fullerton where she studied journalism and minored in political science. She is based in Southern California.You can reach out to her on Twitter at @sophieacvdo or email [email protected].Read more about how Personal Finance Insider chooses, rates, and covers financial products and services >>Below are links to some of her most popular stories:

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