A linked account is a bank account with a connection to another account held by the same customer. There are a number of reasons to hold separate accounts, like wanting to take advantage of good interest on savings while also being able to write checks and use a check card on a checking account. Linking these accounts can confer some advantages on the bank customer, and a number of banks offer this service. There is no charge for linking accounts.
A classic example of a use for a linked account is in overdraft protection. Customers can authorize their banks to withdraw money from savings to cover checking overdrafts, ensuring that they never accidentally overdraw. Depending on bank policies, the bank may charge a fee for the transfer to the linked account. Linked accounts can also be useful for quickly and easily transferring funds between accounts without having to set up a money order, check, or wire transfer.
Members of a family may all have their own bank accounts, sometimes with the names of spouses, parents, or children listed together on one account. Normally these accounts remain entirely separate, but the customers can ask to link them. Linking allows them to transfer funds between accounts easily, for example when children at college need money. Married couples may decide to hold separate bank accounts and a joint account linked to both of their private accounts to allow them to pool money for joint purchases while keeping the rest of their finances separate.
Customers who want to set up a linked account can often do so through online banking. It is possible to link existing accounts or set up a new one and ask for a link. Customers may also choose to go into a bank to meet with bank staffers, who can provide advice and assistance with the process. One thing to be aware of is that people named on a linked account can move funds without consent of the others; parents, for example, might want a link to their children's accounts but may prefer to keep their own separate.
If a linked account becomes a problem, customers can request that the bank sever the link and keep the accounts separate. It is always possible to restore it in the future if the situation changes. It is not possible to link accounts across multiple banks or credit unions; customers need to do all their banking with the same company if they want to have linked accounts.