Spouses or family members who want to capitalize on greatCD rates may be looking to open a joint CD. While joint CDs often have the same rates as individually-purchased CDs, some banks may offer perks to the owners of joint CDs. Here’s a basic overview of joint CDs.

A Shared Financial Responsibility
Both of the owners of a joint CD agree to shoulder the full rights and responsibilities that come with owning a CD account. This means both owners are responsible for knowing the interest rates and maturity dates. If the owners plan to rollover the CD or participate in CD laddering, then both should be aware of the long term plans.

Remember that joint accounts permit either owner to deposit or withdraw funds. Since it’s very important to leave the money in CDs alone, it’s important that both owners communicate clearly with each other regarding transaction activity. Both should agree not to withdraw funds unless absolutely necessary.

There are a few great tips to follow when opening a joint CD.

A Few Pointers for Joint CDs

1.Both of you should look around for the highest yields. When you compare rates, be sure that you compare rates according to the same term. For example, compare the yield on a 1 year CD to a different bank’s 1 year CD. Find out if you can receive any benefits for opening a joint CD.

2.Ensure that both parties show up to the bank in person. Nowadays, banks require that customers provide photo identification before opening an account. Banks will almost always require a government issued ID such as a driver’s license or passport. Also, the bank will require that both of the account holders sign the documents before opening the CD.

3.You can also acquire joint CDs by looking online. Since online banks have comparatively lower overhead costs, many online banks can offer strong interest rates on joint CDs. Take a look at a bank like ING Direct, which offers all sorts of special discounts for account holders. Also, its easy to transfer money from your joint CD to any bank account that you may hold individually. Either owner of the joint CD has access to transfer funds to other accounts.

4.Make sure you report all profits that you have earned on your joint CD. The IRS considers the interest earned from CDs to be taxable income. File all taxes ahead of schedule. Your bank is required to send you an IRS Form 1099-INT. This form contains precise documentation that displays the total amount of interest earned on the CD. Early withdrawal penalties should also be listed on this form. Take care of this documentation so that you can earn profits from your joint CD.

An Essential Bond of Trust
You must establish a solid foundation of trust before you open a joint CD. Ideally, you will only open a joint CD with someone you wholeheartedly trust. Still, if you have combined finances with a spouse, a joint CD is a great way to monitor and increase your assets. Try joint CDs and capitalize on the strongest interest rates available.