You can cash a settlement check at your own bank or credit union, at the bank named on the front of the check, or at certain retailers such as Walmart or Kroger. Which option makes sense depends on the size of the check, whether you have an account, and how quickly you need the money. Settlement checks are usually larger than a paycheck and sometimes list more than one payee, so a little preparation before you walk into the branch saves time.
What to Bring and How to Endorse
Read the payee line first. Settlement checks are often made out to you and your attorney, joined by the word “and.” When two names are connected that way, both people must sign the back before the check can be cashed or deposited.1Consumer Financial Protection Bureau. Do Both My Spouse and I Have to Sign the Back of a Check Made Out to Us? In many cases the insurance company sends the check to your attorney first. The attorney deposits it in a trust account, takes out legal fees and case costs, and then writes you a separate check for your share. If that has already happened, your check will show only your name and you are the sole endorser.
Bring a government-issued photo ID: a driver’s license, passport, or permanent resident card. If you don’t have an account at the place you’re cashing the check, expect to be asked for a second form of identification such as a Social Security card, utility bill, or pay stub.2FDIC. Services Provided to Non-Customers
If your name is misspelled on the front of the check, sign the back twice: once exactly as it appears on the check, then again with your correct signature. That’s standard commercial practice and satisfies the bank’s verification.3D.C. Law Library. District of Columbia Code 28:3-204 – Indorsement Don’t sign the back until you’re at the counter. Once endorsed, the check is payable to anyone holding it.
Cashing at Your Own Bank or Credit Union
Depositing into your own account is usually the simplest route. Your bank already has your identity on file, so the process is faster. For a settlement-sized check, though, expect the bank to require a full deposit rather than handing you cash across the counter. The bank needs time to verify the check through the clearinghouse before releasing funds.
Credit unions follow the same federal rules as banks but can add their own policies for large or out-of-state checks, so ask about the hold before you deposit. Availability is covered further down.
Cashing at the Bank Named on the Check
The bank printed on the face of the check can confirm the account balance and authenticity on the spot. That makes this the best option if you don’t have an account of your own. Bring your photo ID, and expect to be asked for a second form of identification.
Non-customers should expect a fee. Major national banks typically charge $8 to $10 to cash a check for someone who doesn’t hold an account there. For a large settlement, the branch may not have enough cash in the drawer. In that case the bank can issue you a cashier’s check for the remainder or schedule an appointment for a large cash withdrawal.
Retailers and Check-Cashing Stores
Several retailers cash insurance settlement checks for a flat fee that often beats a bank’s non-customer charge, though their dollar limits are lower:
- Walmart cashes pre-printed checks up to $5,000, and up to $7,500 from January through April. The fee is capped at $4 for checks up to $1,000 and $8 for checks between $1,000 and $5,000.4Walmart. Check Cashing
- Grocery chains such as Kroger cash insurance settlement checks up to $5,000 for cardholders, with fees generally in the $3 to $5.50 range.
Dedicated check-cashing storefronts often accept larger checks but charge considerably more. Fees can range from roughly 1.5% to 10% of the check amount depending on the state and the size of the check. These businesses require pre-printed checks and verify them by calling the issuing bank before releasing cash, so a handwritten check from a small law firm may be turned away. On a $25,000 settlement, even a 3% fee is $750. Weigh that against a free deposit at your own bank with a short hold.
Mobile Deposit
Most banks let you deposit checks by taking a photo with your phone, but daily limits make this impractical for most settlements. Typical limits at major banks run from $1,000 to $5,000, and newer accounts often have lower caps. Some banks also reject certain insurance and settlement checks through mobile deposit under internal policies. If your settlement falls under your bank’s limit, it saves a trip; otherwise, plan to visit a branch.
How Long Until the Money Is Yours
When you deposit a settlement check, your bank will almost certainly place a hold on part of it. Federal rules set the maximum holds.
Under Regulation CC, the first $275 of any check deposit must be available by the next business day.5Consumer Financial Protection Bureau. Availability of Funds and Collection of Checks (Regulation CC) Threshold Adjustments For the rest, local checks must be available by the second business day after deposit, while nonlocal checks can be held up to the fifth business day.6eCFR. 12 CFR 229.12 – Availability Schedule
Banks can extend those timelines. If your deposit is over $6,725, the “large deposit” exception adds up to five or six additional business days beyond the normal schedule.5Consumer Financial Protection Bureau. Availability of Funds and Collection of Checks (Regulation CC) Threshold Adjustments Most settlement checks will cross that threshold.
If your account has been open less than 30 days, deposits over $6,725 can be held for up to nine business days, and for some kinds of check deposits in new accounts there is no maximum hold at all under federal rules.7eCFR. 12 CFR Part 229 – Availability of Funds and Collection of Checks (Regulation CC) If you opened an account specifically to receive your settlement, expect a longer wait. The bank must notify you in writing when it applies an extended hold and explain why.
Cash Withdrawals of $10,000 or More
If you pull out $10,000 or more in cash from your settlement deposit, the bank is required to file a Currency Transaction Report with the federal government.8FinCEN. A CTR Reference Guide This is routine paperwork, not an accusation. The bank will confirm your Social Security number and ID.
Do not try to sidestep the report by splitting the withdrawal across multiple visits. Breaking up transactions to stay under $10,000 is called “structuring,” and it is a federal crime punishable by up to five years in prison and a fine of up to $250,000.8FinCEN. A CTR Reference Guide If you need the cash, take it in one trip and let the bank do the paperwork.
Don’t Let the Check Sit
Settlement checks don’t last forever. Most insurance settlement checks are valid for 90 to 180 days from the issue date, and many carry a “void after” date on the face. Under the Uniform Commercial Code, a bank isn’t obligated to pay a check presented more than six months after its date.9Legal Information Institute. UCC 4-404 – Bank Not Obliged to Pay Check More Than Six Months Old
If your check expires, you’ll have to contact the insurance company or your attorney for a replacement. The insurer usually needs to stop payment on the original before cutting a new one, which can take days or weeks, and if the claim file has been closed there will be more paperwork to reopen it. If a check is lost or stolen, call the issuer immediately so they can stop payment and reissue.10Consumer Financial Protection Bureau. How Do I Stop Payment on a Check?
A Note on Taxes
Cashing the check and reporting it are separate questions. Damages for physical injuries or physical sickness are generally excluded from gross income, but punitive damages, emotional distress not tied to a physical injury, and settlements for lost wages or discrimination are generally taxable.11Internal Revenue Service. Tax Implications of Settlements and Judgments If your settlement is $600 or more, the payer may report it to the IRS on Form 1099-MISC, and you’re responsible for reporting taxable settlement income whether or not you receive one.12Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC Before spending a large settlement, confirm with your attorney or a tax professional how much of it is yours to keep.