Joint banking allows two or more people—such as partners, or children and parents—to easily manage money together. With a joint checking account, you can share convenient access to funds, and money you spend on bills and the like comes from the same place.
But when you need to close a joint checking account, shared ownership of the account and the funds inside means navigating some special considerations. Here are five things to know about closing a joint checking account.
1. You May Need Consent to Close the Account
If you're wondering whether you can close a joint checking account on your own, the answer could be complicated. While some banks have policies that allow one of the account owners to close the account individually, it's sometimes the case that you'll need signatures from both owners to close a joint account.
To find out how to close your joint checking account, and whether you can do so on your own, reach out to your bank's customer service department. In some states, it's legally required that anyone who has the ability to write checks from the account also has the ability to close it.
Regardless of bank policies, it's typically in your best interest to close the joint checking account as a team. That way, you'll be on the same page about where any funds in the account will go.
2. Money in the Account May Not Belong to You
You may have access to all the money in your joint checking account, but that doesn't necessarily mean it's all yours. While owning a joint bank account often means you have the right to transfer and move funds in the account, either account owner may have their assets protected by state laws.
For example, there can be legal repercussions if a spouse empties a joint checking account without notifying the other spouse before or after filing for divorce. If you're going through a divorce, it's often the best course to leave your joint assets alone while you create a mutually agreeable plan for division of your marital assets or work with a lawyer. In other words, moving that money now could mean having to pay it back later or, in some cases, even facing legal trouble.
3. Closing the Account Right Away Can Protect You
A breakup is a common reason people close a joint bank account. Beyond claiming your toaster oven and separating your furniture, you should make sure you no longer have access to each other's paychecks. Even if you're splitting up amicably, opening your own bank account and routing your direct deposit into it is part of protecting your own financial security.
Outside of breakups and beyond ensuring your income ends up in your own account, if you leave a joint checking account open, you could end up responsible for any fees incurred. You don't want any surprise bills down the line, so close the account as soon as it makes sense for a clean break.
4. You'll Need to Cancel Your Autopayments
Be sure that, in addition to closing your joint checking account, you cancel autopayments that come out of the account. If your housing payment, utilities, monthly subscriptions and other bills are set up to pull from your joint checking, change your billing method to your new checking account. That way, you'll avoid any returned payment fees.
In addition, be sure you switch your direct deposits so that money doesn't land in the bank account. Otherwise, receiving deposits could trigger the bank to reopen the account. That, too, could result in paying banking fees you didn't expect.
5. Closing a Joint Checking Account Shouldn't Hurt Your Credit
Closing a checking account won't affect your credit because banks don't report your activity to three credit bureaus (Experian, TransUnion and Equifax). That's true whether the account is single or joint.
On the other hand, closing a joint checking account could have an indirect impact on your credit. If you have a negative account balance when you close your joint checking account, your bank will bill you for the outstanding balance. If you don't get in good standing with your bank, they could send your balance to a debt collection agency, which can negatively impact your score.
Fortunately, you can avoid any fees or balances owed by ensuring you're in good standing with your bank before you close your account. If a bank does notify you that you have an outstanding balance, be sure to pay it off ASAP.
The Bottom Line
Whatever your reasons for closing your joint checking account, ensuring you follow the steps above will help you avoid fees and ease the transition to your new account. It's important to open a new checking account, if you don't have one already, before you close your joint account. That can help you avoid a gap in access to banking services.
