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Joint Account: Meaning, benefits & application
In the realm of finance, a joint account is more than just a convenient tool for sharing expenses; it's a symbol of partnership and collaboration. Picture this: you and your trusted ally, whether it be a spouse, family member, or business partner, pooling your resources into a single account to tackle life's financial hurdles together. But what exactly is a joint account, and why should you consider opening one? In this article, we will explore what joint accounts are and why they are so beneficial.
What is a Joint Account?
A Joint Account is a bank account shared between two or more people. Individuals applying together for a Joint Account can easily deposit, withdraw and transact from the same. All account holders have equal ownership as well as access to the funds parked in the Joint Account. In this regard, it can also be called a shared bank account.
In India, several banks offer Joint Account options. For instance, Axis Bank offers Joint Savings Accounts that you can open with your spouse or other family members. The Axis Bank Family Bank also allows family members to open individual accounts for each of the family members and link them together as a family.
How do Joint Accounts work?
A Joint Account or a co-owned account allows two or more individuals to take ownership as well as get access to the funds parked in the bank account. In simple terms, it’s an account with multiple owners.
1. Ownership: Each account holder has equal ownership rights to the money in the account. This means any account holder can deposit or withdraw money from the account without permission of the other holder(s).
2. Access: All account holders can access the account via Debit Cards, cheques or online banking without the need to ask the co-owner to make the transaction.
3. Responsibility: Each account holder is equally responsible for any transactions made from the Joint Account. These transactions include deposits, withdrawals and overdrafts, among other things.
4. Communication: Opening a Joint Account and running it successfully requires effective communication between account holders. Regularly communicating with other account holders is important to ensure that the account is managed responsibly.
5. Legal implications: Joint Account holders may be held liable for debts or other obligations associated with the account, regardless of who initiated the transaction.
Benefits of Joint Bank Accounts
Joint Account privileges range from convenience and ease of management of funds to better financial planning and increased savings. Here are some of the top benefits:
- Convenience
One of the top Joint Account advantages is it provides convenience to the owners of the account. All the owners can access the account to make payments or withdrawals seamlessly – similar to how things work with a single-owner account. This is helpful when other co-owners are unavailable to make the transactions. - Easy management of finances
Joint Account means easy management of finances. It makes managing collective finances simpler as two or more people can collectively save towards a common goal. They can also make joint payments, pay bills or divide expenses with a Joint Account. - Facilitating collaborative decision-making
A Joint Account facilitates collaborative decision-making. This simply means that two or more co-owners of the account can make collaborative decisions, on savings, investments, purchases or repaying bills. You can do almost everything together with proper Joint Account management. - Avoiding probate
A Joint Account helps individuals avoid probate. For instance, when an individual dies, their assets, including savings, are distributed as per their legal will. In the case of the money parked in a Joint Account, the surviving co-owner automatically becomes the sole owner. This avoids time-consuming legal hassles. - Increased savings
A Joint Account helps in increasing the savings of a family or two or more individuals saving for a shared financial goal. Since all the owners contribute towards a Joint Account, the sum saved in the account can be higher than an individual's savings. If you have a Joint Account with your family members, you can save for holidays, weddings and education, among other things. - Better financial planning
Individuals can improve their financial planning with a Joint Account as all the co-owners of the account have access. They can easily track their collective expenses and figure out how they can save better. This can be useful for business partners who are running an early-stage venture and want to cut down costs. - Better credit score
A Joint Account helps all co-owners to improve their credit scores. To achieve this, the owners need to ensure that there is regular activity in their bank accounts. It could be deposits or repayments towards loans or Credit Cards. Having a better credit score can help you avail of loan facilities from the banks with ease and at lower interest rates.
Opening a Joint Bank Account
Starting a Joint Savings Account is similar to opening a single account. You can open a bank account along with the co-owners either by visiting the bank’s website or by visiting the nearby bank branch. There are certain things to keep in mind before opening a Joint Account:
- Choosing the type of account: You have the option to open different types of Savings Accounts jointly with your spouse or other family members. Go through the features and requirements of these accounts before opening one.
- Joint Account eligibility: Ensure that you and your co-owners meet the eligibility criteria before opening a Joint Account. You also need to remember that different types of Joint Accounts may have different types of requirements.
- Agreement: You and the other co-owners of the Joint Account should carefully read the entire agreement before signing it. You should review the fee structure and other terms and conditions
To open a Joint Account, please visit your nearest Axis Bank Branch. Click here to view the required list of documents.
Closing a Joint Bank Account
Here’s how you can close a Joint Account:
- Closing a Joint Account involves submitting an application form to the bank.
- You can get this form either online or at the branch.
- You will also need to get the signatures and approval of all the other co-owners to close the account.
- After submitting the form, a bank manager will review the application and then close the Joint Account.
Also Read: Complete guide on how to open a Savings Account in 5 easy steps
Who pays taxes on a Joint Account?
All holders of the Joint Account are equally responsible for paying taxes on any income earned from the account. Each person's share of the income is reported on their own tax return. It is essential to consult a professional or an accountant to ensure compliance with tax laws and regulations specific to your situation.
Save together as one with family banking
In conclusion, Joint Accounts allow multiple account owners to pool and save funds, share interests and simplify taxation. They also promote collaboration among family members within a single Joint Account. This helps in achieving goals and streamlining the management of shared finances and better savings.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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