How to Cash Different Types of Checks

Cashing a check seems like it should be just like riding a bicycle: if you've done it once, you'll always remember how. That's not necessarily true, however. Banks often have strict policies about cashing different types of checks, especially if you don't have an account there. Some simple tips can help you ride smoothly through the bank policies.

There are two banks you can go to when you need to cash a check: your bank and the bank of the person who wrote the check. At your bank, sign the back of the check and write your account number below your name, then ask the teller to cash it. Some banks won't cash a check unless you have enough in your account to cover the check if it bounces, so ask before signing the check. The teller might ask you to swipe your ATM card or show your driver's license to prove your identity. With any type of check you cash except U.S. Treasury checks, the bank can put a hold on any amount over $100. They must give you $100 according to federal regulations, but the rest can be held for deposit in your account for up to 11 business days. This is typically done only for unusually large amounts or if your account is consistently overdrawn, but it's at the bank manager's discretion.

If you go to the check writer's bank, have two forms of ID ready, such as your driver's license and a credit card with your name on it. Don't be offended if they ask you to touch an ink pad and put your fingerprint on the back of the check; that's standard procedure at some banks if you don't have an account there. Also, banks often charge you a fee to cash a check if you don't bank there, taking it out of the cash they hand you.

How you cash a two-party check depends on how the check is worded. If it says your name "and" the second person's name, both people must be present to cash the check at a bank. If the word "or" is used, then only one of you must be present and endorse the check. You should be able to cash most two-party checks at a bank where one of you has an account or at the bank where the check was drawn, although that usually involves a fee and additional proof of identity.

Another option is to visit a check-cashing center, which can be standalone businesses, a service offered by national discount retailers or part of smaller businesses such as convenience stores. These centers usually require proof of ID, but they often have less stringent requirements than banks. For example, you might be able to cash it by yourself as long as the other person endorsed it. However, check-cashing centers usually charge a hefty fee for their services since they are taking on the risk that the check isn't good. Some charge a flat fee while others charge a percentage of the check amount, so call around to find the best deal.

Let's say your grandmother received a check for her birthday and she wants you to go to the bank and cash it without her. That's called a third-party check. You are the third party since your name is nowhere on the check. In this case, your grandmother must endorse the back with her name and, preferably, her account number, then she must write "For Further Credit to" and your name. This helps reduce the number of stolen checks that are cashed.

Provide your ID and jump through other hoops the bank requires, such as putting your fingerprint on the check or endorsing it yourself. If you or your grandmother is an account holder, or if you go to the bank where the check was drawn, then you should be able to cash it. If you have a problem at a bank, a check-cashing center can probably help you as long as your grandmother endorsed the check first.

If you have a check from the U.S. Treasury, today is your lucky day. You should be able to cash the check at your bank without worrying about a hold being placed on the funds. Federal regulations require that 100 percent of Treasury funds be made available immediately. Most banks will require you to be an account holder before they'll cash the check for you, even Treasury checks. Most check-cashing centers cash Treasury checks for a fee.

Cashing an insurance check can be tricky, as many are large enough to raise red flags behind the teller desk. The bank must give account holders $100 immediately, but they can opt to hold the rest until it clears the other bank, up to 11 days. Some insurance settlements, for car accidents, for example, might be written out to you and the auto repair shop, which means a representative from the auto shop must accompany you to cash the check. You must be an account holder at the bank or go to the bank where the check was drawn.

If you have a home loan through a bank and the bank required you to make repairs -- for hail damage on the roof, for example -- they might hold the insurance settlement funds until they send an inspector out to make sure the work is complete or at least until they verify you've hired a reliable contractor to perform the work. They can put a lien on your home until the damage is repaired, which can make them leery about handing you cash until they know the repair is done. However, check-cashing centers can help; most will cash insurance settlement checks if they are properly endorsed by the people or businesses listed on the front.