5 Ways Sharing a Bank Account Can Get You in Trouble

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KEY POINTS

  • When you share a bank account, their banking mistakes become yours.
  • Sharing an account means giving someone else total access to your money.
  • Keeping accounts of your own can also help keep the peace.

Love has very little to do with financial compatibility.

Sharing a bank account is not for everyone. Whether the person you're planning to share an account with is a spouse, other romantic partner, or aging parent, it's your responsibility to ensure that you are not hurt by pouring your funds into one big pot. Here are five of the ways sharing a bank account can backfire.

1. Your banking reputation can take a hit

If you've never had a problem with your bank account, you may not know about ChexSystems. ChexSystems is a nationwide specialty consumer reporting agency. In short, it's the place where banks, credit unions, and other financial institutions report customer behavior. If a person routinely overdrafts their bank account or the bank is forced to close the account, it is reported to ChexSystems.

Reports to ChexSystems matter. Let's say a person named Sam overdrafts their account so often that the bank closes it. Sam goes to a bank down the street to open another account, but the bank down the street checks ChexSystems, sees that Sam has a history of overdrafts, and refuses to allow Sam to open an account.

How does this apply to you sharing an account with another person? If your names are both on the checking or savings account, any reports regarding the other person's banking behavior also apply to you. A bank will not consider which one of you overdrafted the account.

Sharing a bank account with another person also means sharing their banking reputation.

2. Your money could go toward the other person's debt

Let's say you decide to share a bank account with an aging parent. The problem is, your parent has bad credit card habits. They charge anything and everything they see advertised, then do not pay their credit card balances.

A credit card company wins a court judgment against your parent and a levy is placed on your account. Once the levy is placed, the bank freezes your account and the credit card company has the right to take the money owed from the account.

If your money is mingled with someone else's, their debt could quickly become your debt.

3. You're easier to financially control

As cynical as it may sound, sharing a bank account gives another person a tool to control you. Let's say you move in with the "perfect" person, only to learn that person is actually an abuser. Sharing an account allows them to withdraw every penny, leaving you with nothing. It gives them the opportunity to threaten to harm you financially.

You're only in control of an account solely in your name.

4. The other person's existing obligations should not be your responsibility

If you're sharing an account with someone paying existing financial obligations, like child support, spousal support, or school tuition, your money could go toward covering those expenses. Think long and hard about whether you're willing to pay someone else's bills.

It's possible that someone wants to share an account with you because they know they'll need your financial support.

5. Arguing over money leads to resentment

Let's say you put $5,000 into the bank account each month and the other person also puts $5,000 into the account. After all your shared bills are paid, there's $2,000 left. The other person enjoys spending while you enjoy saving. However, before you have time to save or invest any of the funds left over, the other person spends all but a few dollars of it.

Sharing a bank account is the perfect recipe for conflict. If you have different money styles, you probably should not share an account.

In a perfect world, we could all share a bank account with someone we care about. But even if we trust a person to the bones, we may not share the same financial vision. Before adding your name to someone else's account (or allowing them to add their name to yours), make very sure that you're on the same financial page.

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