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Third-Party Checks: Cashing In

Cashing a third-party check is often a simple matter of endorsing the check properly. Third-party checks differ. One type is a check written to another, signed over, or endorsed, to you. Another is a check written to you by one party and cashed by another. A simple example of this would be cashing your paycheck at your bank.

Types of Third-Party Checks
The term, “third party” means different things to different people. In some instances, a check cashing service will take a personal check, written by you using one of your checks, but not a check made out to you by a third party, such as a friend, family member or business. A money order or cashier’s check can also be considered a third-party check. Examples of third-party checks include those you draw against a 401K, brokerage account or mutual fund, and credit union share drafts, tax refunds or traveler’s checks. A check you are trying to cash that was written to another person or party, but that has been endorsed over to you, is another example of a third-party check.

Check with the Check-Cashing Entity
Not every check-cashing business or bank will take third-party checks. Some that do may not let you cash all types of third-party checks. For example, a company that lets you cash a paycheck may not let you double-endorse a check that was originally written to someone else, then signed over to you. A grocery store may only take personal checks. Before leaving the house to cash any type of third-party check, call in advance to make sure they will cash your check. Some financial institutions will accept a third-party check for deposit, but not give you cash when you cash the check, only releasing the funds after several days.

Have Proper ID
Even if you are going to your regular bank, have proper ID available for cashing any type of check. If you are attempting to cash a third-party check at a new or unfamiliar location, try to do so at a time when the issuer of the check or person who endorsed the check over to you is available for verification that the check is good. At the very least, try to cash your check during business hours so the business considering cashing your check can contact the bank on which the check is written.

Double-Endorsing a Check
If you want cash a check written to someone else, make sure it’s endorsed properly. Have the original recipient of the check place their signature on back of the check exactly the way it’s written on the front. Include a full name, such as “Randolph,” rather than “Randy,” and a middle initial, if that’s included on the payee line on the front of the check. Under their signature, the original endorser should write, “Pay to,” or “Pay to the order of,” and your name, exactly as you will endorse the check. If your name is John Smith, the original endorser will write, “Pay to John Smith.” Under that, sign your name, “John Smith,” exactly as it appears above, using the same signature you used to sign whatever ID you will present to the person cashing the check.

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