When you deposit a check, you endorse it by writing your name and perhaps also your account number on the back. Some people include the phrase “For deposit only.” With the introduction of ATMs that accept deposits, banks are having increasing problems with checks being deposited without proper endorsement. Some may return such checks. Others may send them through. Here are three reasons why you should always endorse checks when you deposit them.

Your Signature Guarantees Your Identity

When you deposit a check in your account, your signature on the back is your personal guarantee of your identity. If the teller is not personally acquainted with you, he or she may ask for a picture identification card to verify your identity and signature. When your bank presents the check to the bank on which it is drawn, with their endorsement also on the back, they are affirming that the prior endorsement is authentic. Without that prior endorsement, the paying bank may refuse to accept the check and return it to your bank. Even if the bank does accept and pay the check, the person who wrote the check may return it to his bank because of the endorsement problem. This initiates the return process and it ends up back at your bank, unpaid.

Your Signature Is Required by Your Account Agreement

When you open an account, you agree to follow all of the rules of the bank. Buried deep in the fine print is a requirement that you endorse each check you deposit with your signature. Without your signature, your bank is responsible for the loss if the bank on which the account is drawn returns it for any reason. So your bank is unlikely to accept a check from you unless it is endorsed. Even if accepted by the teller, no endorsement creates a real risk that the check will be returned unpaid at some stage of the process, even if there are sufficient funds in the account at the paying bank to fund the check.

Returned Checks Can Cost You Money

Banks everywhere are looking for fee income. If your check is returned for any reason, you are likely to incur a bank charge of some sort. Sometimes collecting one fee will trigger other fees, such as overdraft fees. Those fees can be significant. Not endorsing the back of a check brings on an unnecessary risk of a financial penalty from your bank.