Financial Resource Center


December Financial Fitness Challenge—Write Checks Right, or Pay a Price

by Susan Tiffany, CCUFC / December 5th, 2012

A few weeks ago, a friend handed me a check for her portion of a shared purchase. One glance at her check and I knew what I'd be writing about this month. She had made the check out with the numerals centered on the short line on the right side, and she indented the text line a good half inch from the left side. I chuckled and told her, "If I were a crook, I could doctor this check to steal a bit of money from you." This illustration shows how:
My friend—one of the sharpest money managers I know, by the way—was good-natured about my teasing because she knew I was looking out for her. And the experience made me wonder if check writing is becoming a lost art. It could be. Because so many of us rely on debit cards and online bill payments these days, it stands to reason that we're less aware of the safe way to make out a check. That's all the more reason to do it properly on the rare occasions when we have to write a check. It's pretty easy for a crook to make small changes, like the ones shown above. And maybe that small theft wouldn't draw your attention when it shows up in your printed or online statement—something a petty thief counts on. But if you're careless about check writing, you make it just as easy for a crook to make larger and more expensive changes. Here's an example of bolder thievery:
That's why it's important to start writing on each line at the far left, leaving no gaps and filling any unused portion at the end of a line with a cross-through line.

Endorsements matter, too

The way you endorse a check also can leave you open to theft. Before you deposit a check, you must sign your name on the back. This endorsement can be as simple as your signature, but that seldom is the best choice.
Use direct deposit and online bill pay as much as you can, for convenience and safety.
Here are your options:
  • Blank endorsement—Sign your name in the designated space on the back the same way it appears on the front of the check. That means, even if you get a birthday check from your great aunt who still makes it out to Littelbit Swenson, and your name is Elizabeth, endorse it as Littelbit Swenson/Elizabeth Swenson. The blank endorsement is easy but it's the least safe—once you endorse a check this way it's as good as cash. If you lose the check, anyone who recovers it can cash it.
  • Restrictive endorsement—In this case, you restrict, or limit, how you want the check processed: For Deposit Only, Elizabeth Swenson. You can be even more specific and write For Deposit to Checking Only, Elizabeth Swenson.
  • Special endorsement—Say you get a birthday check from Aunt Faustina and you owe the same amount to your neighbor for painting the shed. You would write Pay to the order of Lamar Carnahan/Elizabeth Swenson, then hand it over to your neighbor to deposit in his own account—after he properly endorses it.
Of course, for all the checks you receive routinely, like a paycheck or benefit check, your best choice is to use direct deposit. It's easy to set up and saves time and inconvenience. It's also bullet-proof safe. By March 1, 2013, anyone who gets a Social Security or Veterans Affairs benefit, as well as a few other types of government check, will have to use electronic payments to receive their benefits by direct deposit to an account or to a specific debit card, via the Go Direct program. If this change affects you, learn more about it before the effective date.

Your unique signature

Another part of check security is your name and signature itself.
An endorsement can be as simple as your signature, but that's seldom the best choice.
Have checks printed with your full name, Elizabeth Swenson, for example, instead of Liz Swenson. Then always sign your checks using that form of your name, and in the same style of penmanship. This makes an impostor's signature more likely to stand out and be detected. In fact, it's a good idea to develop and use the same consistent signature on all your formal documents. Here are a few more things to know about safe use of checks and share drafts:
  • Always use a pen. Some consumer advocates advise using black gel ink. Gel ink is less vulnerable to check washing, which lifts the ink from a check so thieves can write whatever they choose.
  • Never sign in advance. I knew of someone who signed all the checks in her check pad "to save time." Yikes—a signed check is as good as cash. If you don't know the amount you'll have to make the check for, or the correct name of the party you need to pay, carry a pen rather than sign the check early.
  • Don't make checks out to Cash. This seems unlikely these days when most people use debit cards and ATMs to get cash. But if you need cash and only have checks, make the check out to yourself or to the financial institution where you're cashing it. Again, if a check to Cash is mislaid or lost or stolen, the finder can cash it.
For any questions about your checking habits, talk to a teller at the credit union. Credit union staff can help, too, when you're ready to introduce a young member of your family to the grownup world of checking accounts.

Financial Fitness Challenge

Your credit union money mentors bring you this website and other tools to help you make the most of your financial resources. The Financial Fitness Challenge continues to look at ways you can make better financial habits no matter what condition the economy is in. ST
Susan Tiffany, CCUFC
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