What is Joint Bank Account and How Does it Work?

A joint bank account is a way to manage your money with another person (spouse or partner) in a simpler way. It offers convenience, so you and the one you are sharing your account with can easily carry out banking activities.

Keep reading to get more details on how a joint account works, its overview, features, benefits, etc.

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What is a Joint Bank Account?

A joint account is a bank account shared with another adult individual. You can start a joint account with anyone, but it is advised that you have a level of familiarity and trust with the person. It can be anyone, like your relatives, spouse, or business partners.

These accounts function like regular bank accounts. You can use a joint bank account to pay bills, deposit paychecks or save for financial goals like a vacation or huge purchases such as a house or a car.

What Are the Features and Benefits of Joint Savings Accounts?

Here are all the important features and benefits of joint savings accounts:

Easy bill payments
Easier management of household budgets and expenses
Married couples can save their money in one place to achieve their financial goals
It helps to maintain a minimum account balance because if one partner is not able to maintain it, other partners can help to fill the rest
In case of a partner's death, the other partner can easily operate the account without any legal issues

Who Is Eligible to Open a Joint Bank Account?

There are no particular eligibility criteria to open a joint bank account. Any two or more adult individuals can open and operate it. The individual can be anyone, including close relatives, spouses, friends or business partners.

How to Open a Joint Bank Account?

Here is a detailed step-by-step guide on how to open a joint savings account:

Step 1: Visit your nearest bank.

Step 2: Ask for the joint account opening application form and KYC form.

Step 3: Fill out both forms correctly.

Step 4: Submit all the necessary documents along with the forms.

Step 5: After submitting the documents, your account will be opened within the next few hours or days.

What Are the Documents Required to Open a Joint Bank Account?

Here is a list of the most important documents required to open a joint account:

Joint account opening application form
A copy of valid identity proof of both the partners like a passport, Voter ID card, Aadhaar card or driving licence.
Correctly filled out the KYC form
Two recently taken passport-size photos of both partners
Address proof of both partners, like the electricity, gas, water or landline phone bill
Bank statements of previous accounts
Copy of leave and licence agreement in case of a temporary address

How to Manage a Joint Account?

Here is a list of strategies that will help you to manage joint accounts:

Keep Track of Expenses and Deposits: It is an essential part of managing a joint account. You need to keep track of each other's expenses to manage the joint bank account successfully. It avoids any misunderstanding in case a partner forgets to inform the other about any expenses they have paid from the account.

Find Out Which Banks Offer Better Interest Rates and Benefits: You must find out which bank offers the best interest rates and benefits. It will help you gain the maximum possible earnings to meet your needs and long-term goals.

Use Internet Banking: Internet banking or net banking is one of the best ways to manage your joint accounts. It will allow both of you to check your minimum account balance and make payments. Other than these, you can withdraw funds with the help of Internet banking and get notified too.

Discuss Purchases With Each Other: If a partner wants to make a purchase, especially a big purchase, with the funds of the joint account, it is important to discuss it with each other. Discussing the purchase beforehand will not catch the other partner off-guard, and it will reduce the chances of any misunderstanding.

Have a Separate Personal Savings Account: Both partners should have their savings accounts other than the joint account. Having a personal account will help you to manage your finances better. It will also allow you to make purchases without anyone's opinion or permission.

What Are the Benefits of Opening a Joint Bank Account?

Here is a list of all the benefits of joint accounts:

Transparency: Transparency is one of the biggest advantages of opening a joint account. Partners of the joint accounts can locate how every penny is spent. It will help you and your partners to reach your financial goals.

Accessibility: Joint accounts allow their partners to access their money seamlessly. They can withdraw the deposited money anywhere, anytime they want, with the help of debit cards and online banking.

Simplified Payments: The automated debit facility of joint accounts helps partners to simplify their bill payments and financial obligations. Internet banking facilities of joint accounts will help you to track your expenses and manage your finances better.

Easy Financial Planning: Both partners that have a joint account together can operate it seamlessly. They can deposit their money together in the account to work towards their future financial goals. It will help them to make their financial planning easier.

What Is the Difference Between Joint Bank Accounts & Other Types of Bank Accounts?

Here are comparisons of joint accounts with other financial instruments:

Joint Bank Accounts vs Regular Savings Accounts: Regular savings accounts are deposit accounts made for individual account holders. Joint accounts are similar to savings accounts, but you must open them with a partner. You can get all the facilities of a regular savings account with a joint account.

However, you must take the permission of the other partner to withdraw funds or make any changes to the account for seamless handling.

Joint Bank Accounts vs Fixed Deposits: The biggest difference between joint bank accounts and fixed deposits is that joint accounts offer liquidity, whereas fixed deposits do not. A fixed deposit is a type of investment instrument that provides fixed interest rates by locking the funds over a maturity period.

If you want to withdraw the funds prematurely, you have to pay a penalty. But there is no maturity period in a joint account.

A joint account is a financial instrument for managing people's finances to achieve long-term goals. It is a great option, especially for married couples, as joint accounts, require commitment and trust in each other. Whenever you apply for a joint bank account with your partner, remember the above details to operate it better.

FAQs About Joint Bank Accounts

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Can both partners withdraw funds from the joint account?

Yes, both partners can withdraw funds from the joint account. It depends upon the account holders. They can choose if they want to give the signatures of any one or both partners to withdraw funds from the account.

Is interest earned from the joint accounts tax deductible?

Yes, the interest earned from the joint account is deductible as tax. If you earn more than ₹10000 per year, TDS will be deducted from the account.

What is the cash deposit limit of joint accounts in India?

The cash deposit limit on joint accounts in India is ₹10 lakhs in a financial year, and you cannot deposit more than ₹2.5 lakhs at a single time. If you exceed any of the abovementioned amounts, your account will be scanned by the Income Tax Department of India.