Joint chequing accounts

A joint chequing account is a bank account shared between two or more individuals that's used to manage day to day transactions. With this type of account, anyone named on the account can access funds within it. Joint accounts are most commonly used by couples and spouses, family members (such as a parent and child) or business partners to cut out the hassle of sending cash back and forth to cover rent or mortgage payments, monthly bills, groceries, and other shared expenses.

Joint chequing accounts can be part of long-term financial strategy, such as an account between a married couple where their salaries are deposited and their mortgage payment is withdrawn, or opened for a temporary period, such as an account between two roommates who contribute funds for bills and shared living expenses for the duration of their lease.

How to open a joint chequing account

The process is similar to opening a personal chequing account. Depending on the financial institution, you can submit a short application online, or you may be required to do it in person at your local branch. Each co-applicant will need to provide some basic information about themselves, such as name, date of birth, social insurance number, contact information, and up to two pieces of identification (ID), such as:

• Driver's license
• Current Canadian passport
• Birth certificate issued in Canada
• Old Age Security card
• Certificate of Indian Status
• Provincial or territorial health insurance card
• Certificate of Canadian Citizenship, or
• Permanent Resident card
• A major credit card with a signature (not a department store card)

If you and your co-applicant already have separate bank accounts at the same provider, the process may be simplified because the financial institution has already verified your identities.

When the account is opened, the accountholders must decide if joint consent is required for withdrawals, transactions and decisions made about the account, or whether each account holder can do this on their own.

Advantages

There are several benefits to setting up a joint chequing account:

• Less hassle, less confusion. With one account for your spending and shared expenses, both parties can look at the account online at any time to see how much money is coming in, and how it's being spent. Spouses can establish their financial goals together, parents can monitor their teenager's spending habits, and adult children can help elderly parents manage their finances.
• Easier to pay bills. You can set up automatic withdrawals from your joint account to pay bills, which makes recordkeeping easier and saves you from having to remembering to transfer money to your partner every month.
• Double the power. With your higher combined balance, you may be able to avoid monthly banking fees.
• Estate planning. If one of the account holders dies, the remaining account holder(s) will be able to access the funds. For example, if your spouse dies suddenly, you won't have to worry about being frozen out of a separate account because you'll have full access to your joint one.

Disadvantages

Of course, financially tethering yourself to another person has its risks:

• Spending squabbles. If one person is thrifty and the other is a big spender, this could cause conflict – or leave one person vulnerable to financial abuse. Reckless spending by one party should be addressed immediately by the other.
• Shared responsibility, for better or worse. Essentially, you're responsible for any transaction made by the other accountholder, and vice versa. For example, if they're a serial cheque bouncer, both your credit histories will be affected. If they have unpaid debts, a creditor may seek to recover amounts it is owed by seizing the funds from the joint account. If they overspend and send the account into overdraft, you're both responsible for the associated fees.
• Breakups. Unless otherwise specified, either accountholder can withdraw some or all of the money in the account at any time, regardless of who deposited the funds. If the relationship goes sour, one party could potentially clean out the shared account. This doesn't just apply to romantic breakups, but family rifts as well.
• Joint finances aren't romantic. Let's face it: household budgeting isn't sexy or fun to talk about. It's also hard to surprise your partner with a gift when the purchase shows up in your joint account's transaction history. This is one instance where spouses may want to keep an additional separate account for personal saving and spending.

The bottom line

Of course, there's no rule that you can't keep your own separate accounts in addition to the joint one. Lots of couples in particular do this because it allows you to set aside money for your own spending and saving, but still offers the convenience of a shared account.

Whether your relationship is romantic, familial or business, it's important to have the “money talk” before opening a joint account to ensure you're on the same page with your spending and saving expectations.