Monday, February 18, 2008
Many people don't give a second thought to endorsing a check that they have received when they want to deposit or cash it. However, the method of endorsing the check makes all the difference in getting a duplicate check if the first is lost or stolen.
The payee, the person to whom the check is made out, must endorse (or sign) the back of the check in order to cash it. Most banks require endorsements in order to deposit the check, as well. A blank endorsement is the method that most people use, but it is not the best method. The payee simply signs his or her name on the back of the check and then presents the check to the bank. It is important to note that this is a blank endorsement and once signed, the check is considered the same as cash. The payee has given permission for the bank to honor the check no matter who presents it for cashing. It is best to use a blank endorsement only at the time the check is being presented for cashing, otherwise, anyone finding the check can cash it.
A better method of endorsing a check is by using the restrictive endorsement. This will limit how the check is handled. If the payee states on the back of the check that it is "For deposit only, Account # 00000" and then signs below those instructions, the bank must deposit the check into that specific bank account. It cannot be cashed. If the check is lost or stolen, this endorsement restricts the check to being deposited only into the account listed. If a check is being mailed to the bank or is being deposited using an ATM, this type of endorsement is preferred.
A different kind of restriction is the special endorsement. This allows a third party to cash the check. If the payee writes on the back of the check "Pay to the order of Phyllis White" and signs it, then Phyllis White has the authority to cash the check - in essence, the check now belongs to Phyllis White. This is also known as a third-party check.
There are three types of checks that guarantee payment. These checks will not bounce and the payee will have no trouble receiving his/her money. A certified check is a personal check that the bank certifies (sometimes for a small fee), the funds are immediately withdrawn from the check writer's account and placed in a special reserve account. The bank, by certifying the check, assures the payee that the funds are available. A certified check looks very similar to a regular check, but it is stamped "certified".
A cashier's check is another type of check that guarantees payment but it is not drawn on a personal account, rather it is drawn on the bank's own funds and is signed by the bank's cashier. A cashier's check is issued only if it is first paid for and the bank generally charges a fee for this service.
A third type of check that guarantees payment is the traveler's check. These checks are typically used by vacationers or business people who want to limit the amount of cash that they carry. Traveler's checks are generally purchased at a bank or financial institution. The purchaser signs the checks at the time they are bought and again when they are cashed or used. This ensures the identity of the purchaser. Normally, traveler's checks come in specific denominations - $20, $100, $500, etc. Once purchased, the buyer should keep a record of the serial numbers of the checks. This will make it easy to replace any checks that are lost or stolen, and in addition, replacement is typically done without delay if the issuer receives proper identification.
Source:- http://www.theadvertiser.com/ |
