The "for deposit only" endorsement is added to the back of a check in order to restrict the payment of the check to the endorser. An even more restrictive endorsement is to write the name of the account number into which the funds are to be deposited, such as "for deposit only to account 1234-123," which requires the funds to be deposited into the specified account. Writing this type of wording onto the back of a check ensures that funds cannot be diverted elsewhere. For example, if a person were to just sign her name in the endorsement block on the back of a check, the check is still considered a bearer instrument, which means that anyone having possession of the check can cash it.
It is most important to use the "for deposit only" endorsement when a check will be out of the physical control of the payee for a period of time, such as when the check is being mailed to a bank for deposit. Conversely, if the payee is hand-carrying the check to a bank, there is less need to use this restrictive endorsement.