What Is a Third Party Check Example?

A third-party check can also be a money order or a cashier’s check. Checks drawn on a 401(k), brokerage account, or mutual fund, as well as credit union share drafts, tax refunds, or traveler’s checks, are examples of third-party checks.

What is considered a third party check?

A third party check refers to any check that is not made payable to you directly and the person whom the check is payable to has endorsed the check over to you. On third party checks, the person to whom the check is made out to and the person depositing the check into their account must sign the back.

What are third party checks used for?

The third party has the right to deposit or cash the funds. You might use third party checks to pay someone without having cash on hand. Most people endorse a check to someone else to cash for them. To endorse a check, sign the back of the check.

Generally, when you cash a check, you take it to a bank, credit union, or check cashing store with your name on it. This is what third party checking is: when person A writes a check made out to person B, but person C cashes that check.