Joint bank accounts can be pretty convenient because they make it easy to share expenses and keep track of your finances as a unit. But in some cases, you may find it no longer beneficial to share your finances together.
If so, it might be time to close the account. When you close a joint bank account, you're basically breaking the financial ties between yourself and the other person on the account.
This can be a helpful step to take if you want a clean breakup with your partner or you want to dissolve any other type of business or personal relationship. It could also be because your banking preference has changed. Read on to learn the step-by-step process of how to close a joint bank account.
Common reasons for closing a joint bank account
There are a number of reasons why someone may choose to close a joint bank account. Here are a few of the most common reasons:
Divorce or breakup
People might consider closing a joint bank account due to divorce or breakup because they want to have more control over their finances. Often, in these situations, it can be difficult to co-manage finances if the two people are no longer together.
Closing the joint account can help simplify things and make it easier to manage money separately.
An uncooperative co-owner on the account
Another reason why one would close a joint account might be due to an uncooperative co-owner. This can be very frustrating, especially if he or she is extremely irresponsible about their finances and is causing the other person to suffer financially.
If there is no clear way to resolve the situation, it might be best to learn how to close a bank account and move on. At the end of the day, if both parties are not on the same page about finances and often fight and bicker about how to manage funds, it's not a good idea to share a bank account.
Changes in banking preference
People might also consider closing a joint bank account due to changes in banking preference. For example, one person in the relationship may prefer to use a certain bank or credit union, while the other person prefers a different institution.
If both parties cannot agree on a banking institution, it can lead to tension and disagreements. In some cases, it may be best to close the joint account and open separate accounts at the bank or credit union of each person's preference.
Step-by-step instructions on how to close a joint bank account
Want to close your joint account but not sure what the exact process looks like? Here are step-by-step instructions to help you close a joint account correctly.
1. Clear all funds in the account
Before you close a joint account, it's important to clear out all the funds in the account. This will ensure that both of you are completely financially independent from each other once you close the account.
You simply do this by withdrawing all of the money from the account or transferring it to another bank account. You'd however both need to decide who gets what money.
2. Cancel automated transactions
A lot of people who close their joint accounts forget to cancel their automatic payments. This can quickly cause a headache for both parties involved. If you have bills that are automatically paid through your bank account, you'll need to contact those companies and update your payment information.
Otherwise, you may end up getting expensive overdraft fees and even delay the process of closing your account. So be sure to review your account’s monthly activity, and consider canceling any cards linked to the account. Canceling automated transactions is how to close a joint bank account without hassle.
3. Open up a new account
Once you've decided that you're going to close a joint account, it's important to open up a new account as soon as possible. This will ensure that your finances are still organized and that you don't experience any disruptions in your daily life.
Keep in mind that it could take some time for payments to redirect and switch over successfully to the new account, so don't rush to close your old joint account until then.
4. Ask your bank to close the old account
The process of closing a joint bank account can differ depending on your bank's policies and procedures. Some banks may ask you to visit a branch and some may be able to process it over the phone.
Just make to find out what the requirements are beforehand. For example, who can request the closure and what documents are required. So contact your financial institution to ask them the requirements and details on how to close a joint bank account.
Can one person close a joint bank account without the other person?
You may be wondering "Can one person close a joint bank account without the other person?" Yes, according to the Consumer Financial Protection Bureau, many banks will allow you to close a joint account without the other person as long as you're one of the co-owners of the account.
Before closing a joint bank account, always make sure to notify the other co-owner of the account. This is because he or she may have pending transactions or deposits that are still processing. By notifying the other co-owner, you can ensure all transactions have gone through smoothly before the account is shut down.
Things to keep in mind when closing a joint bank account
Closing your account is pretty straightforward. But, there are still a few things you need to be aware of when you close a joint bank account to prevent any confusion during the process.
Remember to get confirmation from the bank
When you decide to close a joint bank account, remember to get written confirmation from the bank stating that your account is actually closed. This will help to ensure that there are no misunderstandings about the closure of your account.
Without this confirmation, you may later find out that your joint account didn't close properly. And end up being liable for debts such as overdraft fees associated with the account.
Both co-owners are liable for overdraft fees
You and your account co-owner are both equally liable for penalties that may occur. It's also important to be aware of this during the process of closing a joint bank account as well. For example, if one person uses the account irresponsibly and incurs overdraft fees.
Then, the bank will most likely refuse to close the account until one of you pays down the balance. Keep in mind that if the fees aren't paid, your bank could send debt collection agencies to collect the payment and this can reflect on your credit report for 7 years.
Be careful about deposits
Once you've closed a joint account, make sure to remind both you and the co-owner to not make any deposits to that account again. Because if a bank receives a deposit for a closed account, they may reopen the account and start charging the monthly service fees again.
If you aren't aware of this, you can quickly rack up overdraft fees and get into debt.
Follow this guide to close a joint bank account successfully!
Now you know how to close a joint bank account successfully! When handled correctly, closing a joint bank account is a relatively straightforward process that can protect your finances and your relationship. However, if there's a mistake in the process, you could end up accruing debt and even damaging your credit score.
It's important to make sure that you go through all of the steps correctly so that you're not left holding the bag when things go wrong. Finally, don't be afraid to ask your bank if you have any questions, they're usually happy to help out.