What is the purpose of a restrictive endorsement on a check?

A restrictive endorsement on a check serves to limit the use of the check to a specific account or purpose. This type of endorsement typically includes a phrase such as "For deposit only" along with the signature of the endorser, ensuring that the funds can only be deposited into the designated account and cannot be cashed or transferred to another party. This provides an added layer of security against unauthorized use or cashing of the check.

Choosing to limit usage in this way is important for financial safety, as it helps to prevent fraud or mishandling of funds. In contrast, other types of endorsements, such as those that make a check payable to cash or authorize any transfer, do not restrict the check's use and may expose the funds to greater risk.