Who Cashes Two-Party Checks and What Are the Rules?

A two-party check is a financial instrument made payable to two individuals or entities. These checks are common for joint payments, such as a shared insurance payout, a tax refund filed jointly, or a settlement where multiple parties are entitled to funds. Unlike checks made out to a single person, two-party checks involve specific protocols due to the shared ownership of the funds.

Where You Can Cash Them

Cashing a two-party check involves navigating various financial institutions, each with its own set of policies. Your personal bank or credit union often presents the most straightforward option for cashing such a check. If both payees hold accounts at the same institution, especially a joint account, the process is generally smoother. However, if payees have separate accounts at the same bank, or only one payee is a customer, the bank will likely require both individuals to be present with identification.

You might also consider taking the check to the bank on which it was drawn, also known as the issuing bank. While banks are not legally obligated to cash checks for non-customers, many will do so if the check is drawn on their institution and funds are available. Some banks may charge a fee for this service, which can range from a flat amount, such as $5 to $20, or a percentage of the check’s value.

Check cashing services offer another alternative, though they typically come with higher fees. These services operate outside traditional banking hours and provide immediate access to funds. Fees for cashing checks at these establishments can vary widely, often ranging from 1% to 12% of the check’s value, with some retailers like Walmart charging a maximum of $6 for two-party personal checks up to $200. It is advisable to inquire about their specific policies and fees for two-party checks beforehand, as some may not cash them at all or impose strict limits.

Requirements for Cashing

Both payees must properly endorse the check by signing the back in the designated endorsement area. The wording on the check’s payee line dictates the endorsement requirements; if “AND” connects the names (e.g., “John AND Jane Doe”), both individuals must sign the check. If “OR” or “AND/OR” is used (e.g., “John OR Jane Doe”), typically only one of the named payees needs to endorse it.

All parties named on the check will need to present valid, government-issued photo identification. Acceptable forms of ID typically include a driver’s license, state-issued identification card, military ID, or a passport. Financial institutions require this to verify identity and prevent fraud. In most scenarios, particularly when the payees do not share a joint account, both individuals named on the check must be physically present at the time of the transaction.

Important Considerations for Cashing

Policies for cashing two-party checks can vary significantly among financial institutions. It is always prudent to contact the bank or check cashing service beforehand to confirm their specific requirements and any associated fees. Some banks may place a hold on deposited funds, especially for larger amounts, even after the check has been endorsed and deposited. While the first $225 of a deposited check is generally available the next business day, larger amounts might be held for two to seven business days.

Financial institutions will also undertake a verification process to confirm the check’s authenticity and the identities of the payees. This measure helps to mitigate the risk of fraud. If cashing the check proves difficult, depositing it into a joint bank account where both parties are account holders can be an alternative. This option often streamlines the process, as the bank already has established relationships with both individuals. Alternatively, one party may be able to endorse the check over to the other, but this is less common and depends on the bank’s policy, often requiring specific language and the bank’s approval.