• Go to page :
  • 1 2
  • Text Only
Voting History
rated:
While we have touched on this topic in many threads, I dont think we've ever had a discussion about the evils of joint credit accounts, joint mortgages, etc.

Joint credit accounts are really nothing more than COSIGNED loans (and by now we all know that cosigning is generally bad!)

Disadvantages of Joint Credit Accounts
1. A Late payment dings both credit reports
2. Both individual's debt/income ratios affected by balances reporting to the bureaus
3. Get only 1 credit card signup promo/ 1/2 the rewards cap of 2 separate accounts
4. If CC stolen, can affect both credit reports until corrected
5. Problematic if going through divorce/separation
6. If accounts closed, you may have no individual credit under your own name

etc etc etc.

It is generally best to keep ALL credit accounts (auto, credit card, home loans) separate and individual, whether before, during or after marriage. There are some instances where a joint account will be required (ie to qualify for a home loan of a certain size), but if a debt can be placed in 1 persons name alone, choose that option!

Joint bank/deposit accounts also share many of the same negative characteristics:

Disadvantages of Joint Bank/Deposit Accounts
1. A bounced check dings both people on Chex Systems
2. Get only 1 bank account signup promo, whereas you could get 2 if have individual accounts
3. If ATM stolen, can affect both people until corrected. With 2 separate accounts, the funds in other other account wont be affected
4. Problematic if going through divorce/separation (commingling of assets, etc).

Like Nancy Reagan said, Joints are bad - JUST SAY NO!

It may also be useful to keep in mind how the credit card companies report an authorized user. I am an authroized user (not joint account holder) on my wife's Discover and that card shows up on my credit report. She is an authorized user on my AMEX Blue Cash and I think it also shows up on my credit report. I am not 100% certain on the AMEX reporting practice, so a correction is welcome.

My point is, that if you are planning your credit applications based on the advice and comments in this thread, becareful with adding your spouse as an authorized user because you may end up with many of the disadvantages listed above.

A second point, another disadvantage of a joint account comes up with the death of one of the joint account holders. If your estate plan is more complex than everything to the surviving spouse, joint accounts can make an executor's job more difficult to sort through than two single acocunts.

What about joint bank accounts? any drawbacks?

fotomaniak said:

<< What about joint bank accounts? any drawbacks? >>

sure, joint deposit accounts share many of the same negative characteristics:

Disadvantages of Joint Bank/Deposit Accounts
1. A bounced check dings both people on Chex Systems
2. Get only 1 bank account signup promo, whereas you could get 2 if have individual accounts
3. If ATM stolen, can affect both people until corrected. With 2 separate accounts, the funds in other other account wont be affected
4. Problematic if going through divorce/separation (commingling of assets, etc).

One advantage joint bank accounts is that they avoid probate, although there are other bank account titles that also avoid probate. But individual accounts undergo probate.

One neutral point is that joint bank accounts are FDIC insured to 200k vs individual accounts which are FDIC insured to 100k.

I learned this lesson the hard way.

My first husband and I had everything joint, mortgage, credit cards, bank accounts, etc.. Guess who got screwed during the divorce? Me! I paid my 1/2 on all the bills according to the divorce decree and he declared BK, which affected my credit negatively.

My second hubby and I have nothing held jointly. We each have a house in our name only and have our own credit cards, etc. We are not even authorized users on each others accounts.

I understand what you're saying, but don't prenups and separate accounts (also) just pave the way for easy divorce proceedings.....even though it makes good financial sense to be on the defensive. I know this is a weak argument for not being prepared, like not making a will because you don't want to die. But somehow, marriage...err the test of marriage unlike the inevitability of death....is different and taking too much of a defensive posture from the beginning may tip the scale if you know what I mean.

Some advantages of Joint Accounts:

1. Simplified Bookkeeping (1 set of statements for every 2)
2. If one is unavailable to take care of a transaction for another, the spouse can assist.
3. Ease of transfer of assets upon death.
4. Ease of management of assets upon serious accident or hospitalization.
5. Less solicitations.

Depends on what's most important to you.

DH and I have both, joint and seperate, and although he earns more than I do, I have more assets than he. But we both travel a bit for work, and we've been finding the joint accounts have been very handy for us in many situations.

I also have been getting sick of duplicate mail because of double accounts. I don't believe joint accounts are all that bad, but it also depends on your priorities, preferences and both of your ability to handle financial responsibilities.

One Major Advt abut Joint is..

If u dont have money and ur spouse got some always opt for a joint...
<img src="i/expressions/face-icon-small-happy.gif"border=0>

tooshy said:

<< I understand what you're saying, but don't prenups and separate accounts (also) just pave the way for easy divorce proceedings...... >>

If the couple is destined for divorce, it was going to happen anyway...it wasnt bc of the separate accounts!

POD (pay on death) designations on individual bank accounts avoid probate as well.

Although I have not researched this, one reason my wife and I maintain two separate sets of accounts (except one joint checking account) is the hope of limiting liability.

The theory being that if my wife, a physician, is sued (i.e. malpractice) that the assets in my name would be somewhat insulated. I'm not sure if there is any validity to this practice or not. Anyone care to comment?

I built up my credit history by being the joint (secondary) cardholder on my mom's cc account; but we didn't pay attention to cc promos back then since there's no FW Finance to list all the offers!
But, yes, I could have messed up her credit history if I were a spendthrift and worry about cc issuers jacking up rates when I default on other loans.

SUCKISSTAPLES said:

<< fotomaniak said:

<< What about joint bank accounts? any drawbacks? >>

sure, joint deposit accounts share many of the same negative characteristics:

Disadvantages of Joint Bank/Deposit Accounts
1. A bounced check dings both people on Chex Systems
2. Get only 1 bank account signup promo, whereas you could get 2 if have individual accounts
3. If ATM stolen, can affect both people until corrected. With 2 separate accounts, the funds in other other account wont be affected
4. Problematic if going through divorce/separation (commingling of assets, etc).
>>



Regarding #1. - I believe the Chex system only gets notified after a deadbeat account holder does more than bounce one check. Chex is like a CR agency in that it's a centralized information warehouse for deposit account offerers, but it's unlike a CR because it doesn't hold a "score" - you're either +Chex or not.

Regarding #3. - There's a cap on the amount that can be taken from an ATM daily, usually between $500 - $1000, so unless the victim sits around without reporting the theft this shouldn't be an issue.

Also, ATM Debit cards have different account numbers, so if one gets stolen you only have to deactivate one of the cards.

My wife and I hold seperate credit accounts except for our mtg which wasn't an option to be held by an individual. If I were to pass away, what would happen to my $20K CC debt? Does having seperate credit accounts make her life any easier or will she be forced to pay?

TheGrayMan said:

<< Although I have not researched this, one reason my wife and I maintain two separate sets of accounts (except one joint checking account) is the hope of limiting liability.

The theory being that if my wife, a physician, is sued (i.e. malpractice) that the assets in my name would be somewhat insulated. I'm not sure if there is any validity to this practice or not. Anyone care to comment?
>>

she has malpractice insurance right? If so, you would only need to worry about judgments which exceed the malpractice policy limits...generally they could only get things that have her name on them.

If she has no malpractice insurance, you both need to sit down with a pro and formulate a comprehensive asset protection plan NOW

Arcanlaw said:

<<
My wife and I hold seperate credit accounts except for our mtg which wasn't an option to be held by an individual. If I were to pass away, what would happen to my $20K CC debt? Does having seperate credit accounts make her life any easier or will she be forced to pay?
>>

Your debts would be paid from the assets in your estate, which could include your 1/2 of the house and any deposit accounts with your name on them, depending on how title to these assets was held.

Even if you had NO assets in your name, theres a good chance the creditors would STILL contact your widowed spouse and pressure them to pay the debt, even if there is no legal obligation to do so.

SUCKISSTAPLES said:

<< she has malpractice insurance right? If so, you would only need to worry about judgments which exceed the malpractice policy limits...generally they could only get things that have her name on them.

If she has no malpractice insurance, you both need to sit down with a pro and formulate a comprehensive asset protection plan NOW
>>

Oh yes, she has malpractice insurance. My concern would be, as you said, in the unlikely event that a judgement were to exceed her limits of coverage.

My approach has been this. Any account I open for long term purposes (main checking account, credit card with good long term cash back aspects) I open joint simply for ease of book keeping. Any account I open to grab a teaser (0% Balance Transfer, 5% cashback that I can hit the limits on quickly, etc.) I open individual.

I agree with the basic premis of the OP but joint accounts are more convienent in some cases.

Plus my wife really gets annoyed when I ask her to "call ____ cc company and say _____ and when they say _______ then say _______."<img src="i/expressions/face-icon-small-confused.gif"border=0>

Convenience is just about the only positive to joint accounts, but convenience isnt really a financial factor...

longwood8 said:

<<

Plus my wife really gets annoyed when I ask her to "call ____ cc company and say _____ and when they say _______ then say _______."<img src="i/expressions/face-icon-small-confused.gif"border=0>
>>

Hehe, havent we ALL had this conversation! <img src="i/expressions/face-icon-small-wink.gif"border=0>

SIS, I don't buy your argument about divorce destiny. All marriages take a lot of work and years of committment to make it last 'forever'. How easy it is to go your separate ways when you hit a rough patch if your finances are neatly separated.

longwood8 said:

<< Plus my wife really gets annoyed when I ask her to "call ____ cc company and say _____ and when they say _______ then say _______."<img src="i/expressions/face-icon-small-confused.gif"border=0> >>



Same here! I can't tell you how many times I've heard "It's all your doing and I have no idea, why don't you call them yourself!"

SUCKISSTAPLES said:

<< Convenience is just about the only positive to joint accounts, but convenience isnt really a financial factor... >>



Although one could argue convenience to be a financial factor, no? As an attorney, you know that just about anything can be argued. <img src="i/expressions/face-icon-small-wink.gif"border=0>

sure we can argue anything.

the factors noted in the OP are all direct financial factors, it can be argued that convenience is a financial factor, saves time therefore saves money, etc.

Joint anything is bad news from experience. Especially if your joint goes AWOL! Did anyone ever tell you, NOT to put all your eggs in one basket? Well, let's do the Pro/Con aspect because there can be positive points!

Combining assets is good, if it benefits you as an indiviual. (Like marrying Bill Gates or The Hilton daughter) That's good! Combining any CC/Loan purchases with someone else can also be good to help establish a credit rating and improve it providing payments are made on time. An example might be to purchase a home. Neither one qualifies indiviually but together they do because the loan is based on two incomes. Get your name added to checking/Savings accounts with Mom and Dad just in case. Standard practice unless they don't trust you.

Don't get divorce with joint assets and joint liabilities. Get it changed before hand. Property decribed as 1/2 and 1/2 interest not Mr. and Mrs. Owners. Get your name off joint account (paid) CC debt. Won't work if there is a balance! Get two seperate checking accounts and divide up who pays what each month. If the household bills are in your name only, get it out.

Marriage is based on Love and Trust but you still can position yourself to discourage someone taking advantage.

To provide a counter point, we got a lot of checks as gifts at our wedding made out to both of us. The credit union I use said that these had to be deposited into a joint account, so we had a joint savings created for depositing such checks.

Is this common policy, or just a weird policy my CU has?

Grayman, very true, that is what I heard too.

That's common policy TheGreyMan. The payee has to match the account title. Joint payees have to go into a joint account. There's always exceptions to the rule (lazy tellers, someone at the bank 'knows' you, etc.), but depositing into a joint acct. is the norm.

Good info SIS, people always talk about the negatives of having joint accounts while dating/engaged, but never while married. It makes sense.

Lizard27 said:

<<
Good info SIS, people always talk about the negatives of having joint accounts while dating/engaged, but never while married. It makes sense.
>>

its just as important during marriage as it is before....

i'm totally joint for the ease of bookkeeping...that will probably change once we're both out of school and become open to litigation

Totally agree about credit card or other liability accounts better off to be individual accounts.
But for asset accounts such as money market or checking;
what happen if the individual owner died accidently, the spouse can't
get into the money-- should I establish a will first or when I open
the account, I assign a successor?
What is the legal procedure to get into a dead person's account?

Thanks for the good topic,OP!

Credit Unions seem especially picky about joint checks or third party checks...



<< Plus my wife really gets annoyed when I ask her to "call ____ cc company and say _____ and when they say _______ then say _______." >>

LOL, been there done that lw8! She is always giving me grief about that. <img src="i/expressions/face-icon-small-smile.gif"border=0>

My approach is similar to yours.


Note that individual/AU is more flexible than a joint arrangement, because one can have themselves removed or added as an AU; one doesn't get their credit pulled to be an AU; and if you're the individual party, you can revove the AU at any time.

Many CC companies aren't even doing joint accounts anymore because of the divorce issues.

I agree that joint credit card accounts are generally worse than getting two separate credit accounts... assuming both spouses can qualify. If only one spouse can qualify for <nifty reward card X> then it can be worthwhile to add the second spouse as an authorized user so that his/her CC spending can count for the reward goodies.

Joint bank accounts have their uses. They can provide a convenient way station for electronic transfers between spouses. Most banks will not allow direct transfers between accounts belonging to two different indivduals... but will allow transfers between individual accounts and a joint account, as long as the indivdual account holder is one of the parties on the joint account. So to transfer money from spouse A to spouse B, first move the money into a joint account and then transfer to the other spouse.

DWJoe said:

<< Joint bank accounts have their uses. They can provide a convenient way station for electronic transfers between spouses. Most banks will not allow direct transfers between accounts belonging to two different indivduals... but will allow transfers between individual accounts and a joint account, as long as the indivdual account holder is one of the parties on the joint account. So to transfer money from spouse A to spouse B, first move the money into a joint account and then transfer to the other spouse. >>



That's the main benefit of a joint accout IMO. Especially in conjunction with ING.

I do have a question though -- I currently am a Bank of America customer, and I've got three different accounts that are related (all fall under the Advantage status, all show up on the same online banking page), but not linked for overdraft protection. One is a savings account, and two are checking accounts. Only one account is joint -- that's a checking account with $100 in it. Would my savings account or checking account which usually have far more than be at risk, even though they're not joing accounts?

tooshy said:

<< SIS, I don't buy your argument about divorce destiny. All marriages take a lot of work and years of committment to make it last 'forever'. How easy it is to go your separate ways when you hit a rough patch if your finances are neatly separated. >>



So a couple would get divorced if it was easy but stay together if the divorce was more difficult? Doesn't sound to me like a relationship I'd want to be in either way. <img src="i/expressions/face-icon-small-frown.gif"border=0>

watssion said:

<<
But for asset accounts such as money market or checking;
what happen if the individual owner died accidently, the spouse can't
get into the money-- should I establish a will first or when I open
the account, I assign a successor?
What is the legal procedure to get into a dead person's account?

Thanks for the good topic,OP!
>>



POD (pay on death) designations on individual bank accounts avoid probate as well. All the benficiary needs to do is present death certificate to the bank and spouse (or any other designated beneficiary) can claim the money

DeGlass said:

<< I built up my credit history by being the joint (secondary) cardholder on my mom's cc account; but we didn't pay attention to cc promos back then since there's no FW Finance to list all the offers!
But, yes, I could have messed up her credit history if I were a spendthrift and worry about cc issuers jacking up rates when I default on other loans.
>>



Ditto, this is how I was able to establish credit a young age and have a much longer credit history then most other people in their young 20's.

tooshy said:

<< SIS, I don't buy your argument about divorce destiny. All marriages take a lot of work and years of committment to make it last 'forever'. How easy it is to go your separate ways when you hit a rough patch if your finances are neatly separated. >>



I agree too...if you pave the path for an easy way out, you may have a weak moment and decide to leap. Marriage is about trust and a covenant with each other and God. By setting things up for an easy break you are just laying bricks on the road to failure.

I don't think you really need to open a joint account. You just need to have one person sign over the check to the other person. I've done this a number of times (the other party was not related to me in any way). Of course, this means that all of the money then belongs solely to the other person, but I assume you trust your wife <img src="i/expressions/face-icon-small-wink.gif"border=0>


Lizard27 said:

<< That's common policy TheGreyMan. The payee has to match the account title. Joint payees have to go into a joint account. There's always exceptions to the rule (lazy tellers, someone at the bank 'knows' you, etc.), but depositing into a joint acct. is the norm.
>>


I also noticed that the cretins at AMEX and CITI, etc report authorized user accounts.
Is there a way to avoid this? Can they be forced not to do it.
Is there any legal, legitimate risk to the authorized user?


rhaun said:

<< It may also be useful to keep in mind how the credit card companies report an authorized user. I am an authoized user (not joint account holder) on my wife's Discover and that card shows up on my credit report. She is an authorized user on my AMEX Blue Cash and I think it also shows up on my credit report. I am not 100% certain on the AMEX reporting practice, so a correction is welcome.

My point is, that if you are planning your credit applications based on the advice and comments in this thread, becareful with adding your spouse as an authorized user because you may end up with many of the disadvantages listed above.

A second point, another disadvantage of a joint account comes up with the death of one of the joint account holders. If your estate plan is more complex than everything to the surviving spouse, joint accounts can make an executor's job more difficult to sort through than two single acocunts.
>>


Skipping 32 Messages...
TheGrayMan said: [Q]Although I have not researched this, one reason my wife and I maintain two separate sets of accounts (except one joint checking account) is the hope of limiting liability.

The theory being that if my wife, a physician, is sued (i.e. malpractice) that the assets in my name would be somewhat insulated. I'm not sure if there is any validity to this practice or not. Anyone care to comment?

Wish I could remember when/where or even which medical mag it was that I read about a situation like that - in which the court refused to recognize the couples' property as being divided, stating that it appeared that the couple had divided assets (from the beginning of their marriage, no less) - in the court's opinion - mainly to avoid losing as much in the case of malpractice.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014