How to merge bank accounts with your partner

How to merge bank accounts with your partner

When you’re in a long-term relationship, living together and sharing expenses, having to constantly transfer money to each other can leave you considering merging your accounts.

But many people get a bank account as teens or even children, and they carry that account into adulthood. That makes transferring your entire financial life to another bank and combining it with another person’s account a major hassle.

However, there are things you can do to make the process easier.

Start by talking it through
Before you get started, there are a number of questions you should ask each other to see if merging accounts is appropriate for your situation:

  • How do you manage money? Are you a spender or a saver?
  • How do you want to merge accounts? There are typically three options: separate accounts, one joint account, or two separate accounts plus one household account.
  • Do you have any debts? (Student loans, credit card debt, etc.)
  • What are your financial goals, both as a unit and separately?
  • What bills do you have to pay each month and each year?
  • Which bank do you bank with, and which bank would you like to stick with – or do you want an account at a different bank entirely?

The final question – which bank to choose – can be the hardest for couples to answer, but there are several factors for both of you to consider that can help you make a final decision.

Choosing a bank
Incentives may be one factor in deciding what bank to go with, particularly if both of you are moving your finances to a new shared bank.

“There are often promotional periods that happen during the summer or back-to-school, for example, where banks say, ‘Bring your account over to us and get bonus money’ or, ‘Get the fees waived on your credit card for the first year,'” says Liz Schieck, a financial planner with New School of Finance based in Toronto.

“If you’re moving to a new bank, it’s definitely worth asking what kind of credit cards they have,” Schieck says. “Look at their credit cards and the benefits associated with them.”

Of course, moving bank accounts and changing credit cards can always be separate beasts – you never have to change your credit card to your new bank if you don’t want to. But having a credit card from the same bank as your bank card can help you maximize rewards.

For example, Bank of Montreal offers AirMiles rewards on both their bank cards and credit cards, based on how much you spend and your debit card activity. If you have both your cards with BMO, you’re likely to earn AirMiles faster than if you had, say, a debit card with BMO but a credit card with your old bank.

“It’s important to choose the right bank for you,” says Schieck. “You don’t want to bank somewhere where the rewards are amazing, but the bank fees are outrageous. Paying $50 to $60 in bank fees is just money down the drain, so if the rewards are better with one bank, but the fees are better with another, it’s always possible to have both.”

Still, she says, most people want to have everything in one place, so if that’s important to you, you may need to look more seriously at the rewards.

Bank fees are also a serious consideration when deciding where to combine your accounts, especially if you plan to open more than one account there (for instance, two individual accounts, plus one household account).

There are ways around fees, she says. For instance, you may be able to avoid fees by keeping a certain balance in the account. Ask if the bank offers any way to waive fees at all before accepting them.

“Remember that we are customers of the bank and often we can negotiate those things,” says Schieck. “You don’t just have to accept everything at face value.”

Besides bank fees, the bank you choose may also depend on the number of things you have going on at your current bank. For instance, if you have investments and know you’re going to get a higher level of service there if you keep the rest of your accounts at that bank because of those investments, it might be worth staying put.

“Sometimes, you have these attachments to banks based on other products besides just day-to-day banking, such as a mortgage,” says Schieck. “Also, convenience is a factor. Think about the way you bank and if you take out a lot of cash, you may want a number of ATMs nearby. Or if you send a lot of e-transfers, you may want bank fees where e-transfers are included.”

How to make the merge itself easier
Once you’ve settled on a bank, it’s time to think about what you will need to smoothly merge your accounts.

“Once you’ve decided on a bank, get together all the appropriate paperwork,” says Alyssa Fischer, communications coordinator at Money Mentors, a money coaching firm based in Calgary, Alberta. “Call and confirm what documentation and identification is needed to merge your accounts and open a joint bank account as a couple.”

Sometimes, a bank may offer to migrate all your bill payees and inform all your creditors of your new account as part of a promotion, but more likely, you will need to do all that yourself. Before closing your current account, put together an organized list of your payees so you can give them the new account information.

“Being honest is the easiest way to reduce the stress of merging your finances,” says Fischer. “Sit down, map out all of your accounts, and divide and conquer the work. If one person wants to manage all chequing accounts and the other wants to manage credit – that’s great. Just ensure you have all your bases covered and nothing is being forgotten.”

Additional perk of merging
There’s an additional benefit to a joint account that often is overlooked, but it can save you or your partner plenty of headaches in the future.

“The reason we advocate for merging – or at least listing your spouse as a secondary person on the account – is your spouse may pass away,” says Jennifer Black, private wealth manager at DFS Private Wealth in Mississauga, Ontario.

“Their assets are frozen until the will is probated and the executor divides up the money, which could make it extremely difficult for the surviving spouse to pay bills and manage expenses during the period when the assets are frozen,” Black says. “It’s important they still have access to the account.”

Black also says it’s important that each spouse keep their own credit card when merging accounts so you each have a chance to build and maintain credit in your name.

“What you want to make sure you’re doing is continuing to build credit for both parties,” she says. Typically, she says, one person manages the finances and consolidated both parties to one credit card years ago. Then if something happens, the surviving partner has no credit to their name.

And without credit, Black says, “it’s difficult to do pretty much anything.”