Tired of moving cash back and forth with your partner to pay for housing costs, monthly bills, or groceries? Opening a joint chequing account can be a convenient way to manage finances as a team. And joint accounts aren't just for couples - whether you've tied the knot, are common-law cohabitators, or a parent keeping tabs on your child's cash, you may find the joint approach to be convenient.
But there are some main differences to be aware of. Here are a few ways joint accounts differ from the single variety.
How to Open a Joint Chequing Account
The process may vary slightly between financial institutions, but there’s a basic process for setting up an account as joint holders. Most financial institutions allow you to set up a joint account in person or online. The process is simpler if you and your co-applicant already have separate banking accounts at the financial institution.
Here is a list of information you and your co-applicant may be required to provide when filling out your application:
- 2 pieces of photo ID, such as a driver's license or passport
- Social Insurance Number (SIN) for tax reporting
- Name and address of employer
- A major credit card (not a department store credit card)
The Benefits of a Joint Chequing Account
- The ability to carry a higher balance often means qualifying for premium account products.
- It’s easier to earn more rewards with a joint chequing account - double the effort means double the payoff!
- Maintaining a higher account balance between the two of you means you may be able to avoid monthly banking fees.
- It’s more convenient to pay bills since you’ll no longer need to transfer money between accounts.
- It’s easier to keep track of your spending since bills are paid from a single joint bank account.
The Cons of a Joint Chequing Account
- There may be more disagreements about money since spending decisions are now shared. If you’re a spender and your partner is a saver, this can lead to clashes about money.
- If your relationship ends, your spouse may decide to take their share of money from the joint bank account.
- If your co-applicant is in the habit of bouncing cheques, both your credit histories can be affected.
- It’s hard to surprise your hubby with a gift when the cash withdrawal shows up in the transaction history of your joint chequing account.
Is a Joint Account Right for You?
It's important to have "the Money Talk" - according to a recent BMO poll, over two-thirds (68%) of respondents say fighting over money would be their top reason for divorce, followed by infidelity (60%) and disagreements about family (36%). That’s right - fighting over money is worse than cheating on your spouse!
There are two separate approaches you can take to deal with joint chequing accounts. The first approach is to have one joint bank account for both your spouse and you. While this may sound great in theory, it can quickly lead to disagreements if you have different spending habits.
The second (and my preferred approach) is to open a joint chequing account and maintain separate accounts. The joint account is used to cover household bills, while you both maintain separate bank accounts for discretionary spending. Although your account balance may not be high enough to qualify for premium products, it may be worth it if you constantly squabble with your spouse over money.
The bottom line is that there’s no one-size-fits-all solution for couples. Each couple has to figure out which approach works best for them.
Sean Cooper is a Financial Journalist and Personal Finance Expert, living in Toronto, Ontario. He offers Unbiased Fee-Only Financial Advice, specializing in pensions and the decumulation of financial wealth in retirement. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his personal website: http://www.seancooperwriter.com/