Separate vs. joint bank accounts: Important tips Canadian couples need to consider to manage their money

When a couple commits to a life together, the decision on how to merge money is often overlooked. It's easy to see why since few of us enjoy sorting out how to split bills or figuring out the best joint bank account to open.

For most couples in Canada, combining finances means opening a joint bank account. This shared account is then used to pay bills, such as hydro or rent, and cover regular living expenses. For others, combining finances can also include saving for future goals — using a joint savings account — or multiplying points or cashback using joint reward credit cards. So, how should couples decide? And is it truly better to keep a separate bank account or merge your financial lives using a joint account? The answer depends on your individual and collective goals and the best approach to your family's needs. Money.ca has a simple guide to help you and your partner determine whether or not to keep separate bank accounts or merge and open a joint bank account in Canada.

What is a joint account?

In Canada, a joint bank account is a savings or chequing account opened by two or more people. Having both (or all) names on the account gives each person equal access to the joint bank account and the funds held inside the account.

How to open a joint bank account

Opening a joint bank account in Canada is the same as opening a regular savings or chequing account, with many traditional banks now offering the convenience of online-only or online-first applications. 

When you open a joint account, each spouse will receive a debit card and, depending on the type of account, a chequebook. Once opened, both spouses can deposit and withdraw funds, which makes it easy to divide up financial chores like paying bills and buying groceries. Monitoring accounts is also easier since both spouses can access the joint bank account through a convenient online banking portal, telephone banking, or mobile apps or at a bank branch (if offered).

Pros of opening a joint bank account

Opening a joint bank account in Canada has many benefits. Sharing a joint account lets each spouse access money when needed without having to clear the purchase through their partner first.

From a workload perspective, the best joint bank accounts make it easier to split financial chores. For instance, one spouse may oversee paying bills while the other reconciles the monthly credit card statement. When both spouses have equal access to the money, it is less likely that a single partner will take on all the financial management tasks.

But convenience isn't the only benefit of a joint bank account in Canada. Legally, a joint account protects both spouses should an emergency arise. This is particularly important if you or your spouse become ill or die. Without a joint account, the surviving spouse must go through probate before being granted access to the funds in any bank account that is not a joint account.

Finally, joint accounts can increase financial accountability. This is a big deal, according to the TD Bank Love & Money survey, where more than a quarter (28%) of Canadians admit to keeping a financial secret from their partner. It's more difficult to conceal financial problems if both spouses have access to the money and transactional history in a joint account.

Drawbacks of joint bank accounts

Managing your money through a joint account simplifies daily financial tasks but can also take away a sense of control or autonomy. If a couple chooses to combine their finances, a spouse may feel they have no control over the money they earn — and spend — because it all goes into one account.

These feelings are especially common in the first few months of merging finances. Transitioning from having total autonomy over your money to having another set of eyes reviewing your spending and saving decisions can be a huge adjustment. But don't worry. This feeling of lost autonomy is normal and can be remedied by setting aside a monthly allowance that each spouse has singular control over.

Joint accounts can also cause trouble in a relationship, especially if there are communication problems. Since you'll need to keep track of the money going in and out of joint accounts, consistent and clear communication is key. Otherwise, you may overdraw the accounts, which can cause money arguments.

Finally, problems may also arise when a relationship ends because joint accounts can be messy to separate. Some spouses may even be vindictive – emptying and closing accounts without permission from their soon-to-be ex-spouse. Plus, it can be risky to keep the bulk of your money in a bank account where your soon-to-be-ex has complete access to the funds.

Benefits of using separate bank accounts

Separate accounts do not mean one spouse is any less accountable than the other. It just means you'll approach saving and spending a little bit differently.

Maintaining separate bank accounts usually means splitting the monthly bills equally and saving separately for financial goals like retirement planning and emergencies. You'll each pay off your debts, and big goals like saving for a down payment are done separately and combined just before you're ready to make the purchase.

Some couples choose a hybrid approach with a joint chequing account for shared expenses like rent and groceries while keeping all other spending and savings separate.

Setting financial goals as a couple

Deciding between separate or joint accounts is not easy, and what works for one couple may not work for others. If you're struggling to decide which approach will work for you, try asking yourself the following five questions:

1. How will we pay off debt? While definitive answers aren't required, it's important to understand how you will pay off debt. Will you work together as a couple to pay down debt or divide up what is owed and each be responsible for a portion?

2. How will we save for retirement? Is retirement something you will save for jointly or separately? This is where details matter. For instance, if one spouse has an excellent retirement package offered through their employer, saving for retirement may not be as big of a priority. Knowing these details will help determine common financial goals.

3. How will we handle everyday expenses? Would you prefer that everyday expenses, like groceries and rent, be divvied between spouses, paid for using a joint credit card, or funnelled through the joint bank account?

4. How will we handle emergencies? Will you maintain your own emergency fund in a high-interest savings account or tackle each emergency together as a couple?

5. How will we save for major goals? Will you save money for goals separately, or will you open a joint account and contribute as a couple?

Separate vs. joint bank accounts: How to choose?

Whether to have separate or joint bank accounts is a big question in a relationship, but remember that you don't have to choose one or the other. Many couples ultimately choose a combination of both — it's just a matter of preference. Finally, remember that, just like a relationship, your financial needs will evolve. What works for you now may not be feasible in five years, and you can always make changes to your accounts down the road.

How to choose the best joint bank account in Canada?

Comparing joint accounts is almost identical to comparing standard accounts, such as savings or chequing accounts. To help, consider the following:

Monthly fees: Also known as account maintenance fees, these are regular monthly fees charged by banks and financial institutions. While financial advice usually highlights the benefits of no-fee accounts, there are situations where selecting an account that charges a regular fee makes sense. For instance, if you and your spouse exceed the free transaction limit each month, you could quickly see the per-transaction costs add up. At this point, it makes sense to pay a lower monthly fee to get a higher volume of no-added-fee transactions, each month.  

Transaction limits and fees: To avoid unnecessary per-use charges, examine how many and what type of transactions are included each month.

Access to funds: Look for account access you and your spouse require. For instance, some couples prefer unlimited e-transfers, while others only care about online and mobile app access. If in-branch visits are important, be sure to select a joint account from a traditional bank, such as CIBC and Scotiabank.

ATM fees and access: Since most couples will need access to withdrawals and deposits into a joint account, it's a good idea to compare the ATM fees and access for each joint bank account. Avoid this step, and you may pay higher per-transaction costs for each non-network ATM transaction. 

Before saying "I Do" to having a joint account with your spouse, confirm that the benefits outweigh any loss of financial independence. If you're ready to proceed, follow these five steps to open a joint bank account in Canada. 

5 steps to opening a joint bank account in Canada

Opening a joint bank account in Canada is relatively simple.

Step 1: Shop around. Make a list of all financial institutions that offer bank accounts for multiple account holders.

Step 2: Check the fees. Keeping your banking costs low is important, particularly when saving for a large purchase or tackling debt. To help, pick a joint bank account that charges no or low fees for services you require, such as e-transfers, automatic deposits or withdrawals, and bill payments. 

Step 3: Decide on the method of application. Would you prefer an online-only application, a hybrid (start online before sending in documentation or booking an in-person appointment), or an in-branch appointment when opening an account? While some banks will offer multiple application options, others will not.

Step 4: Apply and verify. Start the process by filling out the required documentation and verifying your identity. Remember that with a joint bank account, all applicants must fill out paperwork and provide identification.

Step 5: Fund your account. Once you and your spouse have submitted the required paperwork, you will be given the next steps. In most cases, you can start using your bank account immediately — even as you wait for debit cards and chequebooks to arrive in the mail.