Do You Endorse a Check Made Out to Cash?
Unravel the specifics of checks written to "cash." Understand their unique status and the correct procedures for handling them.
A check made payable to “cash” presents a unique situation compared to checks issued to a specific person or entity. This type of check can raise questions for recipients regarding how to properly handle it, particularly concerning endorsement and the subsequent process of cashing or depositing the funds. Understanding the specific characteristics of such checks is important for navigating financial transactions securely.
Understanding “Pay to Cash” Checks
A check written out to “cash” differs significantly from one made out to a named payee because it functions as a “bearer instrument.” This means that the check is payable to whoever physically possesses it, making it highly transferable. Under the Uniform Commercial Code (UCC), which governs commercial transactions, a check with no payee specified is considered payable to the bearer, much like physical currency.
Financial institutions treat these checks with increased caution due to the inherent risks. The absence of a specific recipient means that if the check is lost or stolen, anyone who finds it can potentially cash or deposit it. This characteristic makes “pay to cash” checks less secure than those with a designated payee, prompting banks to implement specific procedures for their handling.
Endorsing “Pay to Cash” Checks
Even though a check made out to “cash” is a bearer instrument, endorsement is often necessary for cashing or depositing it. Endorsing the check provides authorization for the bank to process the transaction and helps verify the identity of the person presenting it. The method of endorsement impacts the security and negotiability of the check.
A common method is a blank endorsement, where you simply sign your name on the back of the check, usually within the designated endorsement area. While straightforward, this method carries the highest risk because it converts the check into a document payable to anyone who possesses it. Apply a blank endorsement immediately before presenting the check.
For enhanced security, a restrictive endorsement can be used, such as writing “For Deposit Only” along with your signature and possibly your account number. This instruction ensures that the check can only be deposited into a specified account, preventing it from being cashed by anyone else, even if lost.
Cashing and Depositing “Pay to Cash” Checks
Cashing a check made out to “cash” requires valid government-issued identification to verify your identity. You can attempt to cash the check at your own bank or credit union, or at the bank on which the check is drawn, which is often printed on the check itself. While your own bank will generally process it if you are an account holder, the issuing bank may also cash it for non-customers, though they are not legally obligated to do so and may charge a fee.
When depositing a check made out to “cash” into your account, the process is similar to depositing any other check. You would endorse the back of the check and then submit it for deposit at a bank branch, ATM, or through mobile deposit. However, some banks may have specific policies regarding mobile deposits for “pay to cash” checks, sometimes requiring in-person transactions due to security concerns. Confirm your bank’s specific requirements, especially for mobile deposits or larger amounts, as banks may place holds on funds to verify validity.