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About Cashing a Check at the Bank it is Written On

I recently mused about “endorsing over” a check to a third person. How about the issue of “cashing” a check at the bank it is written on?

Again, let’s look at what a check is, in its barest, legal form. A check is, literally, a command to a bank from an account holder at that bank. That is why check forms state, “pay to the order of”, and the name of a person. When you write a check, you are telling your bank, “I am an account holder at the bank. I command you (the bank) to pay [dollar amount] from my account to the person named on this check at his or her order”.

So what does his or her “order” mean? It means the person named on the check can literally take the check to the bank in question, prove his or her identity, and then demand (order) that the amount of the check be paid to him or her right then and there, in cash.

The vast majority of us do not do that when we receive a check. Most of us who receive a check take the check to OUR bank and deposit it, usually by simply “endorsing” the check on the back with our signature or by endorsing it with the words, “for deposit only” and our signature. Then we hand the check to the teller at our bank for deposit into our account.

When you deposit a check at your bank, what does your signature (endorsement) on the back of the check really mean? Well, the “pay to the order of” on the front of the check is a command from the person who wrote it to HIS or HER bank, it is NOT a command to YOUR bank to do anything. So you sign the check on the back. By doing so, you make the check into “bearer paper”. Now the check is like cash. The original bank will pay the money to the BEARER of the check, regardless of who presents it for payment.

So, you endorse the check and give it to the teller at YOUR bank. What happens next? It is bearer paper. Your banks accepts it. Your bank then asks the other bank to pay them (your bank) the amount of money stated on the check. The other bank does so. Then your bank takes the money paid to them and credits your account with it.

(That is a simplification of the process, but the gist is right and good enough for our purposes.)

(Why would you want to write, “for deposit only”, above your endorsement? One reason is that you fear the check might fall into the wrong hands after it is endorsed but before it gets to the teller at your bank. Maybe you are mailing the check to your bank? Another reason might be that you don’t trust the tellers at your bank. One of them could take the endorsed check, which is bearer paper, and keep it for himself or herself. That sort of criminal conduct on the part of a bank employee is not likely but not impossible.)

Whew! Who knew that depositing a check was so complicated?!

But, let’s get back to the original intent of this blog post. What if you don’t want to take the check to your bank and deposit it? What if you really want to go to the bank the check is written on and demand that they pay you, in cash, the amount shown on the face of the check?

You can try to do that. It is a legal act to demand payment of the check in this way. It is also a legal act for the bank to pay you the money.

But the bank may or may not pay you the money. Regardless of whether the demand for and payment of the money is legal, banks have their own, internal policies about when they will pay a check demanded to be paid by the person the check is written to. They will certainly make you prove your identity. They may also:

  • Contact the person who wrote the check to confirm that he or she really wrote it before paying it
  • Have a dollar limit for such checks above which they will not pay the check when presented in this way
  • Charge you a fee to receive the money

This last requirement that many banks enforce, charging you a fee, irks some people. The person demanding payment says, “I have proven that I am so-and-so and this check is written to so-and-so. Why are you charging me a fee to receive this money? The answer is, “because we can”.

A bank’s reluctance to pay checks on demand in this fashion is due to the fact that the bank trusts other banks more than they trust you. When you deposit the check into your bank account, the request for payment comes from your bank, not you.

But, all of the above said, going to the bank the check is written on and trying to get them to pay you the money is better than using a check cashing place to get paid. Any fee the bank charges for this service is almost always lower than the fee charged by the check cashing place. Of course, it is easier to just go to YOUR bank and deposit the check. If you are going to the bank the check is written on, or a check cashing place, then you don’t have a bank account you can deposit the money into; or, it is not convenient to do so, for some reason. Maybe you are traveling out of state and there is no branch of your bank in the state you are in and you really need the money?

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