Expert Q&A

Closing joint bank accounts after a breakup


On joint credit card accounts, problems arise when you carry a balance. Legally, that debt belongs to both of you, even after a breakup

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QuestionDear New Frugal You,
How do I remove a joint account when I am no longer with that person? It’s with a big national bank. — Whitney


Dear Whitney,
Good question, and one that’s becoming more common. It’s estimated that somewhere near 40 percent to 50 percent of marriages end in divorce. Add the couples living together that split and you have a lot of people who are trying to unwind their finances.

You don’t mention whether it’s a joint savings account or joint credit card account. So we’ll take a brief look at both.

First, joint savings accounts. Many people have joint bank accounts for convenience. But there are risks, too. Generally the law doesn’t care who started the account or who contributed more. Both people are considered to be 100 percent owners of the account. That creates two risks.

First, anyone on a joint account can withdraw all of the funds in the account without the other person’s knowledge. So your former significant other could clean you out in one transaction!

Second, creditors of any account holder can access all of the funds in the account to settle debts owed by either party. So if your ex is a deadbeat, you can expect creditors to attempt to collect from your joint account. And, as far as the law is concerned, the money is his and should be available to cover the debts. Ouch!

The best way to avoid problems is to close the account and divide the assets. Since the asset belong to both people, either party in a joint savings account may withdraw the finds.

It should be simple and easy, but it isn’t always the case. While  it’s true that either party can close the account, some funds, such as inheritances, are legally distinct. The bank may let you close a joint savings account and take the other person’s inheritance, but that act could open yourself up to lawsuit or possibly fraud charges.

Also, banks usually require you to show up in person to close a savings account. If you’ve split and moved to another area, that’s going to impose a hardship.

Closing credit card accounts can be more troublesome — especially if you owe money on the account. If you carry a balance on your credit card accounts, it’s certain you’ll have trouble closing the account.

That’s because the bank wants to keep both of you responsible for the debt. Even if you never used the card, legally, the money was loaned both of you. So they want to be able to collect from either of you if that becomes necessary.

The best strategy is to pay off the account completely and then close it. Often repaying a debt when you’re in the middle of a divorce is hard to do. One solution would be for each of you to open new individual balance transfer account and move a portion of the debt to that account. When the joint account has a zero balance, close it.

If a divorce is involved in your breakup, your divorce agreement may call for your former mate to make certain payments. But that doesn’t necessarily mean that they will. The world is full of divorced people who can’t or refuse to pay debts to their former spouse.

It’s true that you have the right to take them back into court. But that can be expensive and probably won’t solve the problem if they don’t have the money.

Bottom line is that it will be very difficult to close a joint credit card account if there’s a balance due. But you can change the account status so that no additional charges can be made on the account. Do so formally at the account level by contacting the 800 number on the back of the card. As a practical measure, having both partners cut up their cards would also help prevent mischief, accidental or otherwise.

And, while you’re separating your finances, don’t forget to change your beneficiaries on your retirement accounts and life insurance policies. They’re easy to overlook. You’ll also need to update your will.

Breaking up can be devastating emotionally. But if you don’t take proper precautions it can be just as damaging financially. I hope your breakup goes as smoothly as possible.

See related: Mom’s finances after divorce, How to close a credit card account


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