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Important Considerations When Adding Someone to Your Bank Account
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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.
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There are several benefits of adding someone to your bank account when you share financial responsibility such as living expenses or saving for a mutual goal. Family banking or opening an offline or online joint savings account can make the process of financial planning and management easier and more convenient. However, before you go ahead and add someone to your bank account, such as your spouse, child, parent, etc., there are a few important things you must consider. That’s because giving rights to your bank account and finances to anybody else is a big step and needs to be well thought out.
1. Ask yourself how much you trust them
Once you add someone to your bank account, all the money in your account becomes theirs in a legal way. This means, they have the right to withdraw all your money in one go whenever they feel like irrespective of whether they have contributed to the deposits or not. Also, once you add them, you cannot remove them from the bank account without their written consent. Hence, it’s important for you to trust the person before you make this decision and be on the same page with them regarding how the money and account will be managed.
2.Consider the liability that may come
If the person you are adding to your account has a bad credit score, debt, or poor financial history, then this could become just as much your problem. That’s because the funds in your account could be used to meet their obligations and any fees, loans, or overdrafts that result from their actions may become your responsibility too, in a legally binding way. Thus, you must consider not just their existing financial burdens but their overall money behaviour to understand whether adding them to your bank account will end up costing you money.
3. Remember the implications on privacy
Once you open a joint savings account or add someone to your bank savings account, there will be a lack of privacy. They will be able to view your financial transactions and available balance at all times. They will get information on the sources of your cash inflows and the kind of cash outflows from your account. Hence, you need to ask yourself if you are okay with giving up your financial privacy.
4. Come up with ground rules
Before you undertake family banking and open an online joint savings account with your spouse, child, parent, etc., it’s important that the two of you are on the same page and are aware of how having a joint bank account will work. You may want to come up with some ground rules or agreements that both of you are comfortable with. This will help avoid misunderstandings and confusion later.
Once you have considered all these important things, you can easily open a bank account online for you and your family member. The documents needed to open a bank account, specifically an online joint savings account, are minimal such as your KYC documents and documents for income proof. There are several benefits of having a joint account, which you can truly capitalise on, once you and the person you’re opening the account with are clear on the purpose of it.
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