Online banking has made electronic payments fast and easy. But even in these modern times, many people and businesses use paper checks. And when you’re paid by check, you need to endorse it before you deposit it.
But how do you endorse a check? In most cases, “endorsement” simply means that you need to sign the back of the check before you can deposit or cash it.
There are, however, a few different ways to endorse a check, depending on how you want to use it. For instance, you can:
- Endorse the check to sign it over to a third party
- Endorse a check for the benefit of another person
- Endorse a check for a business
- Endorse a check for a certain kind of deposit, like mobile banking
While the steps for endorsing a check are very similar in most countries, there are some differences. In this article, we will just focus on how to endorse a check in the U.S.
How to endorse a check
First, find the endorsement area on the back of the check. You’ll see language such as, “Endorse check here” and three lines. Most checks indicate “do not write” below that endorsement area.
To endorse the check, sign your name within the endorsement area.
This is known as a blank endorsement, but there are other types of endorsements as well that may change the steps you need to take when endorsing a check.
The types of endorsements
There are three main types of endorsements you can use: a blank endorsement, a restrictive endorsement, or a full endorsement. Each type will change how you endorse the check.
1. Blank endorsement
A blank endorsement is the most common way to endorse a check. A check holder (or payee) who wishes to make a blank endorsement can just sign the endorsement area of the check, indicating that they accept transfer of the funds.
2. Restrictive endorsement
To complete a restrictive endorsement, you sign the check in the endorsement area as usual, and then write the words “for deposit only” underneath your signature. This means the check will not be cashable at a cash counter, and you can only deposit the funds into a bank account.
You may also include a specific bank account number to ensure the check can only be deposited into a specific account. You can also write “for mobile deposit only” if you wish for to only be able to cash the check via mobile deposit through your personal banking app.
A restrictive endorsement can be used as a security measure to prevent someone else from cashing a check you’ve endorsed.
3. Full endorsement
A full endorsement is the same thing as a third-party check endorsement, which we will discuss in greater detail below. You must endorse the check next to the words “Pay to the order of” and the name of the person you’re transferring the check to.
How to endorse a check in different situations
Let’s look at examples of the three types of endorsements in action. How you choose to use the check will determine which type of endorsement you need to use.
Depositing or cashing a check at the bank
Whether you want to deposit a check into your checking account or savings accounts or you want to cash a check, you can do so in person at the bank. In this situation, use a blank endorsement.
When you go into a bank with the check, you can turn over the check and sign the back of it in front of the bank teller. That signature tells the bank that you have accepted the check and approve the money for deposit into your account.
If a check does not have the right endorsement, or any at all, you may not be able to access the funds. A bank or credit union may also flag an unendorsed check as fraudulent, which could delay you getting your money.
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.
Depositing a check through an ATM or mobile app
In the 21st century, not many of us often go into a bank to deposit checks. Instead, we deposit them at ATMs or with our cellphones using apps. In these cases, your financial institution will often ask you to use a restrictive endorsement.
The bank or credit union still requires your signature on the back of the check to prove its validity. But they may also require you to include extra information in your endorsement. For example, a mobile banking app may instruct you to write “FOR MOBILE DEPOSIT ONLY” or include your account number on the back of the check in addition to your signature.
Signing over a check to a third party
Instead of depositing or cashing the check yourself, you can sign a check over to another person. In this situation, you will use a full endorsement, which is also known as a special endorsement or a third-party check endorsement.
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).
For a third-party endorsement to work, the bank or other financial institution must know the original payee (you as the second party) approves the payment of the money to the third party.
When you sign over a check to a third person, you need to realize that the check funds will no longer be going to you, but to the person you name in the endorsement. For this reason, you need to be clear as to what’s happening and only use a third-party endorsement with people whom you trust.
What else do I need to know about how to endorse a check?
You must ensure that the original check has the correct date, amount, signature, and payee name before you endorse it.
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. If there are any errors, ask the original check writer to issue a corrected one.
If there is a discrepancy in the written-out and numerical amounts, or if something is illegible or misspelled, the check may not be honored. The recipient can only cash the check if the information on the front of the check is correct.
In most cases, checks have a lifespan of six months. This means if the date is written incorrectly, or it appears as though the check is more than six months old, the recipient cannot cash it. Errors in the payee’s name will also prevent you from cashing the check.
It is not difficult to learn how to endorse a check. As with all other banking matters, though, attention to detail counts. If you fail to endorse a check correctly, you may not get the money you need on time, or even get it at all!
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