In today’s technology centric world the usage of electronic banking has risen significantly. In 2009, the Gartner Group surveyed 3,988 adults and 47 percent of the respondents in the United States said they engage in Internet banking; 30 percent in the UK, and these figures appear to be rising. According to a report by comScore, during April 2012, 423.5 million people worldwide-accessed online banking sites. Consequently, the Sun-Sentinel reported the number of checks processed by the Federal Reserve hit an all time low in 2012.
Don’t count checks out just yet
Despite the fact Internet banking use is soaring high and check use is on a steep decline, many people still rely on good old-fashioned paper checks—there are still millions of checks processed daily across the United States. And even if you do conduct the bulk of your banking online, due to the fact that checks are still very much utilized, it is important to know how to use these documents in the event you receive one. People frequently use checks to pay bills, give gifts of money or pay off various forms of debt.
Endorsing checks
Understanding the concept of endorsing a check is essential, because in order to obtain the money noted on a check, a signature is required to complete the financial transaction. Additionally, in the event you receive a check, you might want to give the money to someone else. Rather than going through the process of cashing it and giving the person the money, you can simply endorse the check with your signature and sign over the sum of the money to another person. If you have a desire, or need, to give a check made out to you to someone else, you can endorse it directly to that individual. In this situation, you’ll want to know how to safely do it so no one else other than the intended cashes the check.
How to endorse a check to a third party
Properly endorsing a check to a third party authorizes a specific individual to receive the money. Signing a check over to another person is a relatively straight forward process. If you want to endorse your check to someone else, here’s what you need to do:
Sign the check: In order to relinquish the check, you have to place your signature on the back of the document below the restrictive endorsement. After you’ve endorsed the check with your name, at this time you’ve given authorization for anyone to obtain the amount designated on the check.
Restrict the endorsement: A restrictive endorsement designates only a specific person can cash or deposit that check. However, if you want to give the money to someone else, you can include an additional restriction to limit the check. To do this, you can write “Pay to the Order of” and list the individual’s name right on the back of the check. Be sure to do this all above the “Do not write below this line” portion of the check. This stipulation limits how the check can be cashed. With a restrictive endorsement, only the person you designate can legally cash the check.
When endorsing a check to someone else, you want to ensure you do it properly. Simply signing the check means anyone who comes across the check can cash it and take the money. You don’t want a stranger walking off the the cash; however, by properly endorsing the check, this safeguards no one other than the authorized person is the recipient of the money.