What It Means to Endorse a Check & How to Do It
Master the simple yet crucial act of endorsing a check. Learn how to properly sign, secure, and validate your payments for safe transactions.
An endorsement transforms a check into a legally transferable document, enabling the payee to cash, deposit, or transfer its funds. This process involves the payee’s signature on the back, authorizing the payment. The primary function of an endorsement is to validate the check for its intended transaction, ensuring the financial institution can properly handle the funds.
How to Endorse a Check
Endorsing a check typically involves signing the back, usually within the designated area on the left. It is important to sign your name exactly as it appears on the “Pay to the Order of” line on the front. If there is a slight difference in the name, such as a misspelling, you should sign both the misspelled version and your correct legal name. For example, if the check is made out to “Jon Doe” but your legal name is “John Doe,” you would sign “Jon Doe” first, followed by “John Doe.”
Always leave sufficient space below your signature for bank processing stamps, which financial institutions use to record the transaction. For security when depositing a check into your own account, consider adding “For Deposit Only” above your signature. Including your account number below this phrase can streamline the deposit process and prevent the check from being cashed by anyone other than the intended account holder. This simple step helps protect your funds from potential misuse.
Common Types of Endorsements
A blank endorsement involves only the payee’s signature on the back of the check. Once signed, the check becomes a “bearer instrument,” meaning anyone who possesses it can cash or deposit it. This type of endorsement carries a security risk, as a lost or stolen check can be misused. Therefore, complete a blank endorsement only at the moment of deposit or cashing.
A restrictive endorsement limits how a check can be used. This is achieved by writing “For Deposit Only” and sometimes including the bank account number above the signature. This ensures the check can only be deposited into the specified account, preventing it from being cashed or further transferred. Financial institutions are legally obligated to honor these restrictions.
A special endorsement allows the payee to transfer the check to another party. This involves writing “Pay to the Order of [New Payee’s Name]” followed by the original payee’s signature. For instance, if John Doe wants to transfer a check to Jane Smith, he would write “Pay to the Order of Jane Smith” and then sign his name. This makes Jane Smith the new payee, who must then endorse the check herself to cash or deposit it.