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Exactly Why Do We Have to Endorse Checks for Deposit?

Disclaimer: The following content is intended as a public service for the generations of young people growing up in a world with little or no concept of what a check is and how you can turn it into money. If you have a child, grandchild, niece or nephew suffering from this societal condition, please share this with them.

Cat Check - Deposit Endorsement

You know that little piece of paper with the picture of the kitten your granny gave you for your birthday? It’s called a “check.” Did you ever figure out what to do with that thing? You do know that it’s worth money, right? It’s like a gift card you can’t swipe.

So, how do you turn a picture of Mr. Whiskers into actual spendable money? You could take it to the bank and deposit it into your account, of course. Or, if you haven’t spent your childhood being raised by wolves, you could take a picture of it with your phone and send it to the bank via your banking app.

The last thing to do before depositing your check

Either way, there’s one little job you have to accomplish before the bank will be willing to turn Mr. Whiskers into money. You have to endorse the check. What’s that mean? It means you have to…get this…sign. your. name. on. the. back. of. the. check.

Whoa, whoa! Let’s just dial it down a little bit. No need to panic. You know your own name, right? You have a pen, right? You know how to sign your name, right? But, WHY? WHY do you have to sign your name? WHY do banks have to make it so difficult to deposit Mr. Whiskers?

Short answer: Because the oldsters laid down a bunch of rules for banks back in the day.

The Long Answer: The check endorsement matters

Granny’s bank has the ultimate authority when it comes to deciding whether you actually get the money.

Pay To - FbookYou see, after you deposit Mr. Whiskers, he goes back to the Bank of Granny to be subtracted from her account. Once the amount of the check is subtracted from her account, it is officially added to your account (even though your bank may have given you immediate “unofficial” access to the money when you deposited it). That means that the Bank of Granny looks at the check when they receive it, and if there’s anything about it they don’t like, they can refuse to take the money out of Granny’s account and put it into yours.

For instance, they will refuse the check if you didn’t sign your name on the back or if you signed your name differently from the way Granny wrote it on the front. And if they don’t take the money out of Granny’s account, guess what? You don’t get the money—even if you have already spent it, your bank will have to send it back to the Bank of Granny.

The BOG doesn’t even have to decide right away—they have three years to decide whether they want to refuse the check. If/when that happens, your bank will have to take the money out of your account and send it back to the BOG.

What happens next—should you fail to properly endorse your check—is what your granny always warned you about: you are about to get “hassled by the man.”

Dealing with The Man

You can fix it, of course, but that means having to:

  1. Locate the check (or get a new check from Granny).
  2. Actually endorse the check this time.
  3. Deposit it again.
  4. This time, your bank will probably make you wait for your money until the BOG sees that the check has cleared the other bank.

If you’ve already spent the money, you could have a negative balance in your account while you wait, which might result in your personal banker giving you that same look your mother always gives you when you are pushing the limits of her patience. That’s a situation to be avoided, my friend.

So, your best bet is to just play along and sign your name on the back the way Granny wrote it on the front. We would like to take this opportunity to extend our deepest sympathies to Johnny “Boo-Boo” McGee. Seriously.

So, now that you know the nitty-gritty of check endorsements, take your picture of Mr. Whiskers (and your endorsement), and deposit that puppy! I mean, kitty. Now Mr. Whiskers can be useful and buy you things and stuff, and you won’t get hassled by the man, which will make your granny proud of you.

About the Author:

Chris Watkins is the director of security at Central National Bank. He is quite the history buff, enjoys reading and collecting books, and can tell you just about anything you’d ever want to know regarding vintage airplanes (1910’s to 1940’s). He serves on the board of directors for the Greater Hewitt Chamber of Commerce and is a member of the Hewitt Kiwanis Club.

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