Closing a Joint Checking Account: What You Need to Know

Joint banking offers a convenient way for multiple people, such as partners or family members, to manage their finances together. With a joint checking account, you can share access to funds, making it easier to handle bills and other expenses. However, closing a joint checking account involves some unique considerations. Here are five essential things to know about closing a joint checking account.

1. Consent May Be Required to Close the Account

If you’re wondering whether you can close a joint checking account on your own, the answer can be complex. Some banks allow one account owner to close the account individually, but others require signatures from both owners. To determine the specific requirements for closing your joint checking account, contact your bank’s customer service department. In some states, it’s legally mandated that anyone who can write checks from the account also has the authority to close it.

Regardless of bank policies, it’s generally best to close the joint checking account as a team. This ensures that both parties are on the same page about where the remaining funds will go.

2. The Money in the Account May Not Be Entirely Yours

While you may have access to all the money in your joint checking account, it doesn’t necessarily mean it’s all yours. Joint account ownership often grants the right to transfer and move funds, but state laws may protect either account owner’s assets.

For instance, there can be legal consequences if a spouse empties a joint checking account without notifying the other spouse before or after filing for divorce. If you’re going through a divorce, it’s usually best to leave joint assets untouched while you work out a mutually agreeable plan for asset division or consult with a lawyer. Moving the money prematurely could result in having to repay it later or even facing legal trouble.

3. Closing the Account Promptly Can Protect You

A breakup is a common reason for closing a joint bank account. Beyond dividing physical possessions, it’s crucial to ensure you no longer have access to each other’s paychecks. Even if the split is amicable, opening your own bank account and routing your direct deposit into it is essential for protecting your financial security.

Additionally, if you leave a joint checking account open, you could be held responsible for any fees incurred. To avoid surprise bills, close the account as soon as it makes sense for a clean break.

4. Cancel Your Autopayments

When closing your joint checking account, don’t forget to cancel any autopayments linked to it. If your housing payment, utilities, monthly subscriptions, and other bills are set to pull from the joint account, update your billing method to your new checking account. This will help you avoid returned payment fees.

Also, ensure you switch your direct deposits to your new account. Otherwise, receiving deposits could trigger the bank to reopen the account, potentially resulting in unexpected banking fees.

5. Closing a Joint Checking Account Shouldn’t Hurt Your Credit

Closing a checking account won’t affect your credit score because banks don’t report your activity to the three credit bureaus (Experian, TransUnion, and Equifax). This holds true for both single and joint accounts.

However, closing a joint checking account could indirectly impact your credit. If you have a negative account balance when you close the account, your bank will bill you for the outstanding balance. Failing to settle this balance could lead to the bank sending it to a debt collection agency, which can negatively affect your credit score.

To avoid any fees or balances owed, ensure you’re in good standing with your bank before closing the account. If the bank notifies you of an outstanding balance, be sure to pay it off as soon as possible.

The Bottom Line

Whatever your reasons for closing your joint checking account, following the steps outlined above will help you avoid fees and ease the transition to your new account. It’s important to open a new checking account, if you don’t already have one, before closing your joint account. This will help you avoid any gaps in access to banking services.

At O1ne Mortgage, we understand that managing your finances can be challenging, especially during significant life changes. If you need assistance with any mortgage services, don’t hesitate to call us at 213-732-3074. Our team of experts is here to help you navigate your financial journey with ease and confidence.