5 Ways Sharing a Bank Account Can Get You in Trouble

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Sharing a bank account is not for everyone. Whether the person you plan to share an account with is a spouse, another romantic partner, or an aging relative, it is your responsibility to ensure that you are not hurt by pouring your funds into a 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 be familiar with ChexSystems. ChexSystems is a national specialty consumer intelligence agency. In short, it’s where banks, credit unions, and other financial institutions report customer behavior. If a person is regularly overdrawn in their bank account or if the bank is forced to close the account, this is reported to ChexSystems.

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Reporting to ChexSystems is important. Let’s say a person named Sam has discovered his 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 if you share an account with another person? If your names are both on the checking account or the savings account, any report regarding the other person’s banking behavior also applies to you. A bank will not consider which of you discovered the account.

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

2. Your money could be used to pay off the other person’s debt

Let’s say you decide to share a bank account with an aging relative. The problem is that your relative has bad credit card habits. They charge for everything they see advertised and then don’t pay their credit card balance.

A credit card company obtains a court judgment against your parent and a charge is taken from your account. Once the charge is made, the bank freezes your account and the credit card company has the right to debit the money due from the account.

If your money is mixed up with someone else’s, their debt could quickly become your debt.

3. You are easier to control financially

As cynical as it sounds, 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 this person is actually an abuser. Sharing an account allows them to withdraw every penny, leaving you with nothing. This gives them the opportunity to threaten to harm you financially.

You only control one account in your name.

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

If you share an account with someone paying existing financial obligations, such as child support, spousal support, or college tuition, your money could be used to cover those expenses. Think long and hard about whether you’re willing to pay someone else’s bills.

Someone may want to share an account with you because they know they will need your financial support.

5. Arguing over money leads to resentment

Let’s say you put $5,000 in the bank account each month and the other person also puts $5,000 in the account. After all of your shared bills are paid, there is $2,000 left. The other person likes to spend while you like to save. However, before you have time to save or invest any of the remaining funds, the other person only spends a few dollars.

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

In a perfect world, we could all share a bank account with someone we love. But even if we trust someone to the core, we may not share the same financial outlook. Before adding your name to someone else’s account (or allowing them to add their name to yours), make sure you’re on the same financial page.

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