When it comes to the duty to accept an endorsement, banks and other financial institutions (such as credit unions) have a fair degree of latitude. To ensure that the accepting financial institution doesn’t reject or dishonor your check, make sure you endorse it appropriately before you date and sign it. In addition to personal hassles (delayed or rejected payments, misdirected fund transfers, the need to re-write a check), erroneous check endorsements can have legal implications. Though not considered legal tender, checks are a form of negotiable instruments that serve as a promise to transfer money from one party (remitter) to another (payee). But even in these modern times, many people and businesses use paper checks.
- Knowing how to write a check, endorse it for deposit and order more checks can help you maximize the value of your checking account and your banking relationship.
- Some types of negotiable instruments may be commonly presented in the form of a blank endorsement for purposes of facilitating the transfer of ownership smoothly.
- Knowing how to endorse a check is part of personal finance management.
Keep in mind that what someone can do with signed-over checks is limited. Most businesses won’t accept third-party checks as payment for goods and services. However, you can typically submit third-party checks for cash or deposit at a financial institution.
Checks Payable to Multiple People
This signature, as well as any other relevant information that’s required in order for the check to be processed efficiently, is called an endorsement. When someone writes you a check, you can deposit it in your account or cash it at the bank to get the money. Before you hand the check over to the bank, you’ll need to endorse it.
If you want a basic checking account with no monthly maintenance fee, or an interest-earning checking account, we’ve got the options that are right for you. Some institutions will not honor the check if you haven’t complied with their guidelines to respect the endorsement area. First, you must make sure you restrict your endorsement entries advantages & disadvantages of multi-step income statement within the designated area on the back of the check. Typically, the reverse side of the check has endorsement regions clearly marked, either vertically on the left/right of the check or horizontally across the entire check. When it came time to go car shopping, my dad and I got the money out of the bank in the form of a money order.
- The check may «clear» your account right away if the funds are available but the checks in these situations are usually fraudulent.
- But even in these modern times, many people and businesses use paper checks.
- You’re the only person who can legally collect money from the check writer’s account.
There are a number of reasons why people might use a blank endorsement. There may be cases, for example, in which the payee is not yet known, and someone uses a check to create a bearer paper which can be used by the payee to access the funds. Some types of negotiable instruments may be commonly presented in the form of a blank endorsement for purposes of facilitating the transfer of ownership smoothly. There are also other settings in which the ability to endorse something without indicating a specific payee can be useful.
Your kids might ask, “where do I sign a check,” and you can enlighten them using this information. Knowing how to endorse a check is part of personal finance management. Use our guide to review all the endorsement types, and endorse your next check with confidence. Some institutions encourage you to write an account number when endorsing the check. Make sure you understand and comply with your institution’s policies.
Anybody else who endorses these checks needs to be authorized to handle funds for the company. Customer deposits, including checks using any variety of endorsement methods, provide banks with the ready cash to make loans. Commercial banks make money by providing loans and earning interest income from those loans.
Then you can provide your correct name in your official signature. As a financial security rule, only endorse the check when you’re ready to deposit it, so there’s less room for it to get lost and end up in the wrong hands. There are a few different types of endorsements, which serve specific purposes. Here’s a breakdown of each and how you can guarantee your check is processed correctly and securely. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site.
Check with your bank or credit union to see if they allow ATM check deposits and specific instructions on how to deposit a check. Some banks accept checks without endorsements, but this is rare. A mobile check deposit without an endorsement is likely to be rejected, even if initially accepted from your phone.
Endorsing a check via mobile
Guidelines on endorsing a check may vary depending on the financial institution you are using. Knowing your bank’s specific guidelines helps to ensure that you are endorsing the check correctly. In addition to signing the back of the check, you will also write “pay to the order of” and the first and last name of the person you’re transferring the check to. Essentially, you’re transferring the check’s funds to someone who is neither the person that wrote the check (the first party) nor the original payee (the second party). If you are going to deposit or cash your check in person, wait to endorse the check until you’re at the bank. If you endorse the check in advance, someone else could take the funds if the check falls into their hands.
Endorsing a Check to Someone Else
You don’t need to deposit the check and write a new one to the third party. Instead, you can endorse the check by writing “Pay to the order of [Person’s Name]” and then signing the check as you would normally. One way to keep track of the checks you write is to record them in the paper check register that comes with a standard order of checks.
Smith,” the back of the check should be signed with the incorrect spelling followed by the correct spelling below. Banking services provided by The Bancorp Bank, N.A., Member FDIC. If there is a discrepancy in the written-out and numerical amounts, or if something is illegible, the check may not be honored. The recipient can only cash the check if the information on the front of the check is correct.
Types of Endorsements
If you don’t include a phrase to this effect, a bank can reject the endorsement attempt. With online transfers becoming increasingly popular, it’s understandable if you don’t know how to cash a check. By endorsing a check, you authorize the bank to collect payment.
To protect yourself from fraud, ensure the fund amount in the right-hand box in numbers matches the amount written out on the second line in the middle. Let’s look at examples of the three types of endorsements in action. How you choose to use the check will determine the type of endorsement you need. To endorse the check, sign your name within the endorsement area.
However, before you consider this, find out if both your bank and their bank allows this. Everything from making sure that the check is filled out correctly, to making sure it isn’t modified after your endorsement. The last thing you want is to go all the way to the bank, only to find out that the check is invalid. Before we dive into some tips for endorsing checks, it’s important to understand what each section of a check represents.
Before you start writing and using paper checks, you need to be able to identify the sections of a check. There are three important numbers whose locations are similar on every printed check. The check may «clear» your account right away if the funds are available but the checks in these situations are usually fraudulent. It can take days to discover the fraud and you must then repay your bank any funds you’ve withdrawn based on the fraudulent check. Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.