Understanding How Third Party Cheques Work: A Step-by-Step Guide
Learn how third party cheques function, including endorsements and bank policies.
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Third-party cheques involve two endorsements. The cheque is initially made out to one person, who then endorses it over to a third person by signing the back and writing 'Pay to the order of [Third Person’s Name]'. The third person also needs to sign the back. This process allows the third person to deposit or cash the cheque. Always verify with your bank, as policies can vary.**
FAQs & Answers
- What is a third-party cheque? A third-party cheque is a cheque that is made out to one person and then endorsed over to another person, allowing the third person to cash or deposit the cheque.
- How do you endorse a third-party cheque? To endorse a third-party cheque, the original payee must sign the back of the cheque and write 'Pay to the order of [Third Person’s Name]'. The third person must also sign the back.
- Are third-party cheques accepted by all banks? Not all banks accept third-party cheques due to varying policies, so it’s important to verify with your bank beforehand.
- Can I use a third-party cheque to pay bills? Yes, you can use a third-party cheque to pay bills, provided the payee agrees to accept it and the necessary endorsements are completed.