Marrying Bank Accounts

A newly married couple has three options when it comes to deciding how to handle their bank accounts: They can choose to combine everything into joint bank accounts, keep everything separate, or do a combination of the two, perhaps keeping one joint account for regular shared expenses and two individual accounts for personal expenses. There are pros and cons to each of these options. It’s up to the couple to decide which option works best for their individual needs.

Here are some things to consider when deciding whether to join accounts or not:

  • Are your financial philosophies compatible? If one of you is a spender and the other is a saver, joining your accounts might lead to future money squabbles when the saver tries to rein in their partner’s spending. However, this set-up can also work better if the saver is put in charge of managing the account.
  • Are your salaries fairly similar? Keeping completely or partially separate accounts gets complicated when a couple with salary disparities tries paying for joint expenses such as rent or utilities. A couple must decide who pays for what, or what percentage of each salary goes toward shared expenses.
  • How does the future look? No one wants to plan for possible divorce, but it’s important to consider the effects of an unsteady marriage on a joint account. It’s much easier to proceed with a divorce when finances have been kept separate.

Some Facts about Joint Checking and Savings Accounts

A joint checking or savings account is held equally by both spouses, meaning that you each have an equal share in the money within the account, regardless of who originally deposited it. If your spouse regularly contributes double what you do to a joint account, that doesn’t mean he or she owns double what you own. But just as you have equal access to each other’s money, you also share the burden of overdraft charges, debt collections, and garnishments. However, don’t forget that, whether or not you have a joint account, your money can be negatively affected by your spouse’s wrongdoings.

On the plus side, a joint account is a lot easier for many couples to manage, since all spending information is in one place. It’s also easier to avoid bank fees or worry about minimum balances when you have fewer accounts to manage. On the other hand, it can be difficult to avoid overdrawing a joint account when both parties withdraw money without communicating effectively to each other. Then again, the same communication errors and lack of openness can also lead to overspending if a couple has separate accounts. A joint account is convenient if one spouse is unavailable or dies, as the other spouse can still fully access the account. This is called Rights of Survivorship. For couples seeking this benefit who don’t want to deal with the downsides to joining their accounts, naming each other as beneficiaries in a “payable on death account” works just as well.

Some Facts about Joint Credit Accounts

A joint credit account is similar to any other joint account in that both parties can charge equally and both are equally responsible for debts and penalties.

Getting married won’t join your credit score with your spouse’s, but actions either of you make within a joint credit account will affect both of your scores.

If your spouse makes poor credit decisions on a shared account, your credit score could suffer as a result.

When initially applying for joint credit, either in the form of a credit card or a loan, one party’s bad credit can affect the joint credit. On the plus side, one partner’s good credit score can positively affect the other partner’s credit if the account is used properly. The partner with low credit may also be eligible for a higher credit limit and lower interest rates when applying for a credit card with his or her spouse.

Another benefit of joining your credit accounts is simplicity: you’ll be paying off and keeping track of fewer bills, and you can each easily see each other’s spending.

An alternative to joining credit accounts is to name one party an authorized user on the other’s account. Both parties can still use credit equally as if it were a joint account, but the authorized user is not responsible for paying debt. A benefit of this option is that it’s much easier to remove an authorized user from your account than to remove a joint account holder. Depending on what credit scoring system is used, an authorized user’s activity on your account may not affect his or her own credit score.

It may be a good idea to keep older credit accounts open, whether you decide to get a joint account or not. Older accounts with a history of positive activity boost your credit score and having more available credit will, too.

It’s important to take these facts into account when deciding how to best join your finances with your spouse. Whether you join accounts or keep them separate, you will have to work at keeping finances fair within your marriage and diminishing fights about money. Some couples will choose to join their checking and savings accounts while keeping credit separate, or vice versa. Both parties must decide what level of financial union works best for their marriage.