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Today many financial transactions are conducted electronically, but believe it or not paper checks are still very much used. People use them to pay bills, send monetary gifts, or pay off other financial obligations. While direct deposit has become more and more popular, many people still receive a weekly or bi-weekly paper paycheck from their employer.

Despite the popularity of electronic transmissions, understanding how to use checks is still an important skill to have because paper checks aren't extinct just yet. It's important to not only understand how to use checks, but to practice safe methods in endorsing and cashing them as well.

You may be wondering why anyone would ever have the need to sign over a check to another person in this day and age, but there are several circumstances where you might find the need to endorse a check over to someone else.

For instance, you may want someone to cash a check for you. If you are traveling and have no access to a branch of your local bank and need some money, you can ask someone to cash your check at their branch. You might be wondering "Why wouldn't I just use my ATM?". This is true, but maybe you've gone over your limit for daily withdrawals or don't have enough money in your ATM connected account to cover the sum of money you need.

If you owe someone money, you can sign a check you received over to them. It's easier than going through the hassle of cashing a check in order to pay someone in cash or to simply turn around and write them another check to pay your debt. Endorsing the check over to this person saves on time because it cuts out some of the extra steps.

There may be a circumstance where you want to deposit the check in someone else's account. You may have a relative in need who you want to give money to and want to sign a paycheck over to them to deposit. Or maybe you don't have access to your account when you are traveling and want to keep your funds safe rather than carry around a loose paper check with a large sum of money attached to it. Instead, you may want to entrust another person to hold onto it in their account for you until you are able to get to a branch of your own bank.

Occasionally you may receive a check which was erroneously written out to the wrong. If a check was made out and sent to you by mistake instead of someone else, you can endorse the check over to the rightful person so they can receive their money.

How to endorse a check over to someone else:

For security purposes when you endorse your check for someone else to cash, make sure you sign it as a restrictive endorsement. A restrictive endorsement means only the person you designate by name when you sign the back of your check can cash it. This is important for safeguarding the money as the check leaves your hands.

If you don't stipulate a specific person in your endorsement, anyone who happens to come across your check can cash it. With a restrictive endorsement, only the person you designate will be able to legally cash that check.

How you endorse your check this way is to sign the check in your own name and right below it and write the words "Pay to the order of ". When you sign and indicate the endorsed party, make sure you write this all above the "Do not write below this line" part of the back of the check.

Once you do this you have endorsed the check over to another person, you have authorized them to cash the check and no one else can deposit or cash that check except the person you have specified. This safeguards the funds attached to the check to ensure only the rightful person you have designated gets access to the money.

Learn more about this author, Leigh Goessl.
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