Having a joint account has its pros and cons. While a joint account may be a good idea to save up for a project or for partners, it may become a bad option if your financial partner has bad money habits.
A joint account is like a normal account but owned by more than one person who also has access to the money and can make withdrawals, write deposits and close the account. All owners are responsible for overdraft charges and other bank fees regardless of who caused them.
While joint accounts are convenient, many people do not understand the risks of equal ownership.
Here are reasons why a joint account may not be a good option
1. Money in joint accounts is at risk to creditors and lawsuits
Regardless of who attracted a debt, the money owned by both partners can be used to settle the bills of one person. For instance, if partner A incurred a debt, as long as partner A is part of the ownership of the money, the money in the account will be used to settle the bill. Debt collectors don’t care whose money is in the bank.
2. It requires a great level of trust
You must implicitly trust your partner. Because the bank has no power over your partner or your money, so even if your partner withdraws money meant for a project, the bank can do nothing. Opening a joint account will certainly require someone you can trust with your money.
3. Joint accounts don’t give individual protection
Unlike your personal account where you can plan on how and when to use your money, joint accounts may not give you that liberty because your partner can decide to make a withdrawal anytime. With or without your consent.