When you are paid with a check, you will normally sign it on the back so that you can deposit it in your bank account or cash it. Signing a check in this way is known as “endorsing” it.
How you endorse a check depends on the type of check it is and how you want to use it. In most cases, however, endorsement is necessary for the issuing bank or financial institution to settle the funds associated with the check.
In this guide we’ll show you how you should endorse checks and explain the important differences among different types of checks and endorsements.
- Endorsing a check is a relatively simple process that significantly improves your banking security.
- Different types of checks require different types of endorsement, but most involve signing the back of a check to prove that you are the legal owner of the funds it represents.
- Learning how to endorse a check is a basic part of financial literacy, so make sure you know how the system works.
How to Endorse a Check
The way you choose to endorse a check depends on what you want to do with the cash associated with it. First, though, a general word of warning about check fraud. The reason why banks require you to endorse checks is in order to prevent fraud. Signing the back of a check helps to confirm your identity.
However, it is possible for criminals to intercept your check before it is processed, alter the endorsement, and thereby steal the money associated with it. Because of this, you should limit the time between endorsing it and having it processed. This gives criminals the smallest possible window in which to steal it.
You endorse a check by signing the back of it. On most checks there is a box at the top containing a stack of at least three lines that has the heading “Endorse Here,” and another, larger box beneath it with the heading "Do Not Write, Stamp, or Sign Below This Line." You should endorse the check in the top box.
The most secure way to do this is called a “restrictive” endorsement. To make one, you should, in any order:
- Write “For Deposit Only” on one line
- Write the account number on another line
- Sign your name on another line
There are other ways to endorse a check, but this is the most secure because it instructs your bank that funds should only be sent into the account you have specified. They can’t be given out as cash or deposited into any other account.
One slight problem with using this method is that the person who gave you the check might be able to see your bank account number because they might receive a copy of the canceled check via their own bank. If you are worried about them seeing your bank account number, it is possible to just write “For Deposit Only.” However, this is a less secure option.
In addition, even if you don’t write your account number on the check, your bank might well stamp your account number on the back of it during processing, and so the person who gave it to you will see your account number either way. The best option is to stick with the procedure above.
Wait until the last possible moment to endorse your check, so that it cannot be intercepted before it is processed. Doing this helps to guard against check fraud.
Other Types of Endorsement
It is possible to endorse a check in other ways, whether you’re passing on the funds to someone else or cashing it. These include:
Endorsing a Check to a Third Party
It’s possible to utilize a check made out to you to pay someone else. Essentially, you are sending the money associated with the check directly from the payee to someone else. This is known as a special endorsement.
Write the following in the endorsement area:
- “Pay to the order of” followed by the name of the individual you wish to have the money
- Sign your name underneath
Your chosen recipient would then have to sign their name beneath yours before depositing or cashing the check.
If this seems like an insecure way to send money, that’s because it is. It can be a good idea to accompany this person to the bank to provide proof of identification because frequently banks won’t accept checks endorsed in this way unless the payee is present. If you try to endorse a check in this way, your bank will probably tell you to deposit the funds into your account first, and then send them in a different way. That’s good advice.
If, however, you really have no choice but to endorse a check like this, you should first make sure that both the check writer’s and the payee’s bank will accept the endorsement. Otherwise, it will simply bounce, and you won’t be able to access the funds at all.
A “blank” endorsement is by far the least secure way of endorsing a check, but it is also the most common. To do this you simply sign your name on the back of the check and then tell the bank teller whether you want to deposit it to a particular account or cash it. You can also use a blank endorsement when you deposit a check via mobile deposit or an ATM. This is not a very secure way to endorse a check, but if you sign it just before you deposit it, you can limit the possibilities for fraud.
Sometimes a check will be made out to a business rather than an individual. In this case a check must be endorsed on behalf of the business, and this must be done by an authorized individual. The process of endorsing a check for a business is slightly more complex, but it is done in the same box where you endorse checks for individuals. To endorse a check for a business:
- Write the name of the business
- Sign your name underneath this line (along with your company title in print form)
If you use your bank’s smartphone app or online system to deposit your check, it might be that you need to endorse it in a particular way. There are a few banks that will require you to write “mobile deposit” if you use this method, so check your bank’s guidelines if you are doing this.
Common Issues With Endorsing a Check
Though the process of endorsing a check seems straightforward, there can be issues that arise. These can delay how long it takes for your bank to process a check and even prevent it from doing so altogether.
One of the most common problems you will encounter when endorsing a check is that the person who has written it has spelled your name incorrectly. This can be an issue, because if there is a mismatch between the front of a check’s spelling and your endorsement, your bank may refuse to process it. Unfortunately, about the only way around this issue at present (other than asking the check writer to make out another check) is to copy their incorrect spelling in your endorsement.
Sometimes a check will be made out to multiple payees. This is often the case with checks given as wedding presents, where a check will be made out to “John and Jane Smith.” This simple form of words can create a real inconvenience, though, because many banks will insist that in this instance both parties must endorse the check, even if it is being deposited into a joint account.
If you have received a check like this, consult with your bank on what its policy is for processing it. And if you are making out a check to a couple, make life easier for them by writing “John OR Jane Smith."
Do You Always Need to Endorse a Check?
The vast majority of checks will need to be endorsed in order to be used. Because endorsements provide extra security for your funds, most banks will be reluctant to take a check that has not been properly endorsed.
There are, however, a couple of exceptions to this. One is that certain kinds of electronic checks don’t need to be endorsed, at least not in person. A second is that certain banks offer a service whereby they will deposit a check with no endorsement. However, there is usually a longer wait before the funds clear, and you will likely have to confirm your identity.
What Is a Blank Endorsement?
A blank endorsement consists simply of the signature of the person to whom the check is made out on its back side. This makes the check negotiable tender for anyone holding it, not just the endorser, so it is not a very safe from of endorsement. That said, it is the most common form.
What Is a Restrictive Endorsement?
A restrictive endorsement includes not only the signature of the endorser but also the words “For Deposit Only” and the bank account number in which it is to be deposited. This prevents anyone else cashing or depositing the check.
What Is a Third-Party Endorsement?
In this case you are signing over a check made out to you to someone else. You first write “Pay to the order of” followed by the name of the person you wish to have the funds. Then you sign your below that. A number of banks will no longer accept such an endorsement, so make sure in advance that your bank will. And even if it will, it may require you to be present for identification purposes when your third party cashes or deposits the check.
The Bottom Line
Endorsing a check is a relatively simple process that significantly improves your banking security. Different types of checks require different types of endorsement, but most of them involve signing the backside of a check to prove that you are the legal owner of the funds it represents. Learning how to endorse a check is a basic part of financial literacy, so make sure you know how the system works.