Once a check has been endorsed, it can be presented at a bank for deposit or payment. If the endorsement is not assigned to a specific person, it can be presented by the bearer for payment. For that reason, it is important to endorse checks properly so that they cannot be used by unknown third parties.

Withhold Endorsement Until Banked...

No check should be endorsed until it is to be converted to usable funds. An unendorsed check will not easily be cashed by a third party because they will lack proper identification to match the name to whom the check is written. Should someone attempt to forge your signature, recovering the funds will be a simple matter. Banks are responsible for requiring proper identification and will return your funds should they err.

Endorsed Without Assignment Is Cash...

Once signed, checks are viable financial instruments. In effect, they become payable to the person in possession of them. Even though lost checks that were lost and then cashed by someone else can be challenged, the process takes time. Meanwhile, the funds are unavailable to the person who carelessly endorsed the check without assigning it to a third party. For that reason, never endorse a check without naming to whom it is payable.

Endorsed For Deposit With Account Number Noted...

If a check is endorsed and noted for deposit only, it can no longer be exchanged by anyone for cash because it has been designated for deposit. Should the account number be included in the endorsement, it becomes account specific. However, should the check be lost before reaching your bank account; anyone finding the check has important personal information that must remain confidential. No one should ever note their account numbers on checks excepting at the bank at the moment of depositing them.

How we handle our money is important to our financial well-being. Checks should never be endorsed until they are to be deposited or cashed. Most banks prefer to see the check as it is endorsed to verify the signature with proper identification. By developing the habit of endorsing checks at the proper time, your financial interests are best served.

If you must endorse a check to a third party so that they can bank it, always assign it by adding "pay to the order of (their name)". Then, it is only bankable by that specific party and not a financial instrument with value to whomever is the bearer.

Learn more about this author, Bob Schmidt.
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