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At some point in your financial life, you’re likely to want to sign over a check to someone else instead of depositing it or cashing it. Maybe you received a check but don’t currently have a bank account so a friend will cash the check for you. Or perhaps you want to endorse a check you received and give it to your landlord as part of your rent payment.

To sign a check over to someone else isn’t hard, but you do need to follow the right protocol. In a few simple steps, the check can be ready for processing by the person you’re giving it to.

Here’s a quick guide on how to sign over checks to someone else, plus some points to consider before accepting a check that has been endorsed to you.

5 Steps to Signing Over a Check

Generally, when someone writes you a check, you (the payee) are the only person who can cash it or deposit it into your bank account.

But can you sign a check over to someone else? Yes. These five steps detail how to sign a check over to someone else (you may hear a check that’s been signed over referred to as a “third-party check,” incidentally).

1. Make Sure the Check is Still Good

Before you begin the process of signing over a check, it’s a good idea to take a look at the date it was written by the payer, especially if the check has been lying around for a while.

How long are checks good for? Generally, checks are good for six months. After that, the bank may refuse to accept it.

(This is true for both business and personal checks, incidentally.)

If the bank does accept a check older than six months, the check could potentially bounce if the issuer no longer has the funds in their account.

2. Get the Okay From the Recipient

Before endorsing a check to a third party, whether that’s a person, a business, or a landlord, it can be wise to first reach out to that third party and confirm that they are open to accepting this form of payment.

When moving through the signing over process, it’s important that you and the recipient both agree to the transfer.


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3. Verify the Bank Will Allow the Signed Over Check

Banks often have different rules and requirements when it comes to accepting third-party checks.

To help ensure the process will go smoothly, it can be a good idea to call the recipient’s bank and ask about their policies before you endorse the check.

That way, you can avoid adding extra signatures and names to the back of the check (which can create confusion and delays if you later need to cash or deposit it somewhere else).

You may also want to find out what kind of identification the recipient will need to bring to the bank or if there is anything special they should do or know before bringing the check to the bank.

4. Endorse The Check Correctly

The next step in how to sign a check over is to endorse or sign it. Checks that typically come in your checkbook have an area on the back that reads “Endorse Check Here.”

On the line just below that, you will want to sign your name in pen, writing it just as it appears on the front of the check.

Underneath your signature, you’ll then want to write, “Pay to the order of [Recipient’s name].”

It’s a good idea to clearly write out the recipient’s name as it appears on their driver’s license or other photo identification they will use at the bank when depositing the check.

Check’s often say “do not write, stamp or sign below this line” beneath the endorsement area. You’ll want to try to avoid running into this area. If you do, the bank may refuse the check.

Recommended: How to Write a Check to Yourself

5. Transfer the Check

Once you’ve endorsed the check, you will have a “third party check” that you can give to the person you signed it over to so that they cash or deposit the check into their bank account.

While it may not be essential, you may also want to consider accompanying the recipient to their bank with your own photo identification to ensure it’s a seamless transaction and in case the bank teller has any questions.

If you decide you will be going to the bank together, you may want to hold off signing over the check until you get there. That way, you can endorse the check right in front of the teller after showing your ID.

Can You Deposit Someone Else’s Check in Your Account?

Depending on your bank, you may or may not be able to deposit or cash a check that has been signed over to you.

As mentioned above, some banks might not want to accept an endorsed-to-you check because there’s a chance it could be a fraudulent check. Many check-cashing places won’t accept this form of a check either.

That’s why it’s a good idea to check with your bank before accepting a third-party check as a form of payment.

In addition, you may want to keep the following considerations in mind before accepting a signed-over check as opposed to one written directly to you.

•  They can be less convenient. Unlike a regular check, you typically can’t deposit a third-party check at an ATM or upload it via your bank’s mobile deposit app. Getting the check cashed or deposited generally requires a trip to the bank.

•  It could be a scam. There are lots of fake check scams out there (see below for more details).

•  It could potentially bounce. Even if you know and trust the person who is signing the check over to you, there may still be a bit of risk involved. That’s because you can’t be certain the original person who wrote the check has the funds to cover it. If they don’t, it will be a case of the check bouncing, and you won’t get the money.

Alternatives to Signing a Check Over to Someone

Perhaps you discover that your bank won’t take a third-party check. Or what if the person you wanted to sign a check over to says “no thanks”? Now what? Try these options.

Use a Money Transfer App

If you wanted to sign a check over to someone because you are trying to pay them, you could instead deposit the check and use a money transfer app, such as PayPal, Venmo, or Cash App.

Open a Bank Account

If the reason you want to sign over a check is that you don’t have a place to deposit it, you could open a free checking account. Or, if you have had issues with your banking in the past (such as too many overdrafts or an account being closed by your bank), you might look into what is known as a second chance checking account. These can have some restrictions but allow you access and may eventually be transitioned to a standard checking account.

Try a Check-Cashing Business

If you have a received check but don’t have an account to deposit it into and need to get funds to someone, you could try a check-cashing business. While this can be a convenient option, the fees can be quite high.

Recommended: What Is an Electronic Check (E-Check)?

Do All Banks Accept Third-Party Checks?

Not all banks accept checks signed over to someone else. That is why it can be a smart move to check first before you try to go this route. You or the person to whom you signed over a check could wind up discovering that the check is not accepted for deposit once you arrive at the bank. Or it could be rejected if mobile or ATM deposit is used.

Also, if the bank does accept these checks and you are going the in-person route to deposit it, you may want to ask what sort of identification may be required. You may need some additional ID in order for the check to be cashed or deposited.

Watch Out for Check Cashing Scams

Third-party checks may be used as a ploy in fraudulent transactions, so be wary. You could become a victim of one if someone you don’t know offers to sign over a check to you (often for a large amount) as payment or in exchange for cash. For instance, if you were selling a used mobile phone for $400 and a person offers to sign over a check for $500 to you and tells you to keep the excess, that’s a major red flag.

That’s why it can be wise to only accept an endorsed check from a person you know and trust or verify the check before depositing.

Opening a Checking Account With SoFi

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How can you cash a check that is not in your name?

If you want to cash a check that is not in your name, you could have the person to whom the check is made out endorse the check to you. Then, make sure that your bank will accept it. Another option is to request a new check from the payor if it was mistakenly made out to the wrong name. Or contact your bank for guidance.

Can you mobile deposit a check signed over to you?

It is likely that you can mobile deposit a check that has been signed over to you, but it can be wise to double-check your financial institution’s policies to be sure.

Can someone deposit a check for you without your signature?

Generally, banks require a signature on the back to deposit a check. If someone is depositing a check for you, it will likely need to say “For deposit only” and have your signature to be accepted.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

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What Is a Payback Period?

The payback period is the amount of time it will take to recoup the initial cost of an investment, or to reach its break-even point. Considering the ups and down of various market factors — e.g. the crypto winter or the impact of higher-than-usual interest rates — being able to gauge the payback period is one of the most important calculations for investors when planning investments and returns.

The payback period can help investors decide between different investments that may have a lot of similarities, as they’ll often want to choose the one that will pay back in the shortest amount of time. The longer money remains locked up in an investment without earning a return, the more time an investor must wait until they can access that cash again, and the more risk there is of losing the initial investment capital.

Using the Payback Period

The payback period can apply to personal investments such as solar panels or property maintenance, or investments in equipment or other assets that a company might consider acquiring. Often an investment that requires a large amount of capital upfront generates steady or increasing returns over time, although there is also some risk that the returns won’t turn out as hoped or predicted.

Calculating payback periods is especially important for startup companies with limited capital that want to be sure they can recoup their money without going out of business. Companies also use the payback period to select between different investment opportunities or to help them understand the risk-reward ratio of a given investment.

Knowing the payback period is helpful if there’s a risk of a project ending in the future. For example, if a company might lose a lease or a contract, the sooner they can recoup any investments they’re making into their business the less risk they have of losing that capital.

Any particular project or investment can have a short or long payback period. A short period means the investment breaks even or gets paid back in a relatively short amount of time by the cash flow generated by the investment, whereas a long period means the investment takes longer to recoup. How investors understand that period will depend on their time horizon.

How to Calculate the Payback Period

Prior to calculating the payback period of a particular investment, one might consider what their maximum payback period would be to move forward with the investment. This will help give them some parameters to work with when making investment decisions. If the calculated payback period is less than the desired period, this may be a safer investment.

In simple terms, the payback period is calculated by dividing the cost of the investment by the annual cash flow until the cumulative cash flow is positive, which is the payback year. Payback period is generally expressed in years.

There are two easy basis payback period formulas:

Payback Period Formula – Averaging Method

Payback Period = Initial Investment / Yearly Cash Flow

Using the averaging method, the initial amount of the investment is divided by annualized cash flows an investment is projected to generate. This works well if cash flows are predictable or expected to be consistent over time, but otherwise this method may not be very accurate.

For example: If a company makes an investment of $1,000,000 in new equipment which is expected to generate $250,000 in revenue per year, the calculation would be:

$1,000,000 / $250,000 = 4-year payback period

If they have another option to invest $1,000,000 into equipment which they expect to generate $280,000 in revenue per year, the calculation would be:

$1,000,000 / $280,000 = 3.57-year payback period

Since the second option has a shorter payback period, this may be a better choice for the company.

Payback Formula – Subtraction Method

Payback Period = the last year with negative cash flow + (Amount of cash flow at the end of that year / Cash flow during the year after that year)

Using the subtraction method, one starts by subtracting individual annual cash flows from the initial investment amount, and then does the division. This method works better if cash flows vary from year to year.

For example: A company is considering making a $550,000 investment in new equipment. The expected cash flows are as follows:

Calculation:

Year 4 is the last year with negative cash flow, so the payback period equation is:

4 + ($25,000 / $60,000) = 4.42

So the payback period is 4.42 years.

Other factors

Investors might also choose to add depreciation and taxes into the equation, to account for any lost value of an investment over time.

Benefits of Using the Payback Period

The payback period is simple to understand and calculate. It can provide individuals and companies with valuable insights into potential investments, and help them decide which option provides the best return on investment (ROI). It also helps with assessing the risk of different investments. Advantages include:

•  Easily understandable

•  Simple to calculate

•  Tool for risk assessment

•  Helps with comparing and choosing investment options

•  Provides insights for financial planning

•  Other calculations, such as net present value and internal rate of return, don’t

•  look at the amount of time it takes to recoup an investment

Downsides of Using the Payback Period

Although the payback period can be a useful calculation for individuals and companies considering and comparing investments, it has some downsides. The calculation only looks at the time period up until the initial investment will be recouped. It doesn’t consider the earnings the investment will bring in after that, which may either be higher or lower, and could determine whether it makes sense as a long-term investment.

If earnings will continue to increase, a longer payback period might be acceptable. If earnings might decrease after a certain number of years, the investment may not be a good idea even if it breaks even quickly. On the other hand, an investment with a short lifespan could need replacement shortly after its payback period, making it a potentially poor investment.

The payback period doesn’t take into consideration other ways an investment might bring value, such as partnerships or brand awareness. This can result in investors overlooking the long-term benefits of the investment since they’re too focused on short-term ROI.

The payback period equation also doesn’t take into account the effects an investment might have on the rest of the company’s operations. For instance, new equipment might require a significant amount of expensive power, or might not be able to run as often as it would need to in order to reach the payback goal.

Another limitation of the payback period is that it doesn’t take the time value of money (TVM) into account. The time value of money is the idea that cash will be worth more in the future than it is worth today, due to the amount of interest that it can generate. Not only does this apply to the initial capital put into an investment, but it’s also important because as an investment generates returns, that cash can then be reinvested into something else that earns interest or income. This is another reason that a shorter payback period makes for a more attractive investment.

The Takeaway

You can use the payback period in your own life when making large purchase decisions and consider their opportunity cost. Understanding the way that companies calculate their payback period is also helpful to determine their financial viability and whether it makes sense for you to invest in them as part of your portfolio.

Whether you’re new to investing or already have a portfolio started, there are many tools available to help you be successful. One great online investing tool is SoFi Invest® online brokerage platform. The investing platform lets you research and track your favorite stocks and ETFs. You can easily buy and sell with just a few clicks on your phone, and view your portfolio on one simple dashboard.

You can choose from either active or automated investing. With active investing, you can hand select each individual stock or ETF you wish to add to your portfolio. Using automated investing, you can choose from groups of pre-selected stocks. There are additional tools in the app to set personal financial goals and add all your banking and investment accounts so you can see all of your information in one place.

If you have any questions or need help getting started, SoFi has a team of professional financial advisors available to help you reach your personal financial goals.

You may also be interested in:

Rate of Return (RoR): Formula and Calculation Examples

NPV Formula: How to Calculate Net Present Value

Discounted Cash Flow (DCF) Explained

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