Understanding the Rules and Functioning of Joint Bank Accounts

A joint bank account has more than one account holder. These accounts can be a bank savings account, current account, fixed deposit account, or loan account. While opening an offline or online joint account is common, there are many doubts that a new holder tends to have. Here’s a comprehensive guide on joint bank savings accounts. Read on to find answers to your questions.

What is a Joint Savings Account?

When you open a savings bank account jointly, it means the account will be shared and operated by two or more individuals. Usually, such accounts are set up by family members and are often termed family banking accounts. In a joint savings account, each account holder has equal access to the account to deposit and withdraw funds.

What Are the Types of Joint Accounts?

• Joint – All account transactions must be signed by all bank account holders. If any account holder expires, the account may be deemed inoperable, and the balance may pass on to the surviving holder’s account.

• Survivor or joint – This savings account is the same as the joint one, but here the survivor can continue using the bank account.

• Survivor or either – This savings account comes with two bank account holders i.e., primary, and secondary holders and can be operated by either or both.

• Survivor or former – Only primary bank holders can use this account. Here the secondary holders can operate the account only after the primary holder’s demise.

• Survivor or latter – The secondary bank account holder can use the account. After the death of the secondary holder, the primary holder can take over the account.

• Survivor or anyone – This kind of joint savings account can be operated by multiple holders, and they do not need every account holder to sign on every transaction.

What Are the Joint Account Rules?

While most banks offer the option to open a savings account jointly, most restrict the number of holders to four. Each holder has the right to deposit, withdraw, and manage the funds in the bank account. While some joint savings bank accounts allow just the primary holder the liberty for bank transactions, that does not mean the secondary holders have no rights. Once the funds are deposited, the balance belongs to all the account holders irrespective of the source. Note that any account holder also has the right to close the joint account entirely. Given such rules, depositing your hard-earned funds in the joint account requires the presence of trust in other account holders.

Ending Note

A joint bank account has various benefits and is best for business partners and spouses. However, there are specific rules and regulations you must abide by. Also, you must ensure to open a joint bank account only with those whom you can rely on.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.