Online sellers warned on UK cheque clearance changes

cleared

I've always thought banks have done this incorrectly. in a sense, I don't mind too much how long it takes to clear, as long as it is made abundantly clear to me that it has cleared, and once cleared, that's the end of it.

if a cheque takes 7 working days to clear then I think that either:

a) it should nto appear on my statement until it is cleared or

b) it should appear labelled as not cleared, and ocne it has cleared, the statement should say so clearly.

is there any major problem with either of the two ideas? it makes no sense to me that your bank account should be updated to reflect a payment that has not yet been approved. if the money is not mine to spend, why is it in my account? I don't want to see it there, and then have to count the days trying to work out if it's safe to post an item or not yet, I want it to be clearly marked as safe so that I can be sure that everything is okay.

dave

Declining use - not our choice

Only because the big stores are wriggling out of accepting them. Cheques have come to my rescue on occasions when I was waiting for an incoming chq to clear so couldn't use a card at the supermarket.

Print Customer Phone Numbers on Cheques!

is Andy goodwill a muppet? credit card transactions are already better protected by the consumer credit act which does not include cheques as they are debit not credit. this system is only a clarification of what most banks already use, hence no changes, for the majority, all it does is set a deadline for processing which at present is not universal or clear. However fraud is still easily possible and viable, and at cost to the vendor, the sooner banks print customer phone numbers on cheques the better, this way transactions can be verified directly, the only way to really check is directly with the customer. These changes only really affect bounced cheques & fakes.

Declining use - the irony

So the cheques came to your rescue when funds were not available because it takes ages for cheques to clear ?

You mean to tell me that you actually send around pieces of paper to initiate a transfer of funds ? How 19th century.

@David Haworth

It does clearly show on the banks system as uncleared and is shown on your account along with two balances your cleared and uncleared balance, however banks dont like to confuse customers so will only put one balance on paper, or on the ATM. to find your cleared and uncleared balances you will have to queue for 4.8 hours and speak to a human, if they have any in stock.

Another way to delay cheques...

I was told that the odd-looking numbers at the bottom of a cheque were printed with a 'magnetic ink' containing iron fragments. This was to make them machine-readable for faster processing.

So you demagnetise the cheques and they would have to be processed manually and double the clearing time...

I guess this is redundant information nowadays but can anyone confirm it?

@Who still uses these old fashioned things?

I do. When a bank wants to charge me 3% of a sum being transferred with no upper limit then a cheque which doesn't cost me anything makes sense.

Its a scam

Check clearing in the US used to take a week or more but a couple of years ago that all changed. The new inter-bank system means the things clear in seconds, they're more like a direct debit. This has two consequences -- the first is that you can't guarantee that a check you write will have any delay whatsoever that you can use to transfer funds to cover it. Checks are cleared immediately, and if you've got insufficient funds then you'll get hit with the fee. The second is that most large retailers will process your check as a direct debit, so if you write a check they'll read it and debit your account on the spot.

British banking used to be way more sophisticated than US banking. If they insist on holding the check for a week (is it a 'week' or 'seven working days'?) (as if a computer gets time off) then they're scamming you for the float. This is serious money for the banks and you should call them on it.

The truth....

....is, that cheques COULD be cleared in 24 hours or even less, but then the banks would not get to use that money during the 7 day period that "clearing" time gives them. So, with this income source cut off, banks would have to charge more for their services....

Choose: free, slower cheque processing or fast, paid for processing.

And yes, you can choose... you can usually pay for express clearance on a cheque if you really want/need it.

The REAL scandal is that CASH also has a "clearing" period. Deposit 100 quid over the counter at your own branch then marvel at the 3 days or more that it takes to actually hit your account.

Here in NZ:

1. Most stores (afaict) don't accept cheques

2. A cheque from a recognised institution deposited over the counter can optionally be express cleared for no charge (e.g. if you get a refund cheque from your power company)

3. Cash deposited over the counter appears INSTANTLY in your a/c - you can deposit cash over the counter then immediately withdraw it via the cashpoint. If you wanted to.

4. EFT-POS transactions (Electronic Fund Transfer at Point Of Sale - is a card+PIN based payment, but is NOT a credit/debit card) appear INSTANTLY on your account. You can go out shopping, then come home and check to see how much money you actually have left in your A/C via online banking.

Guess what.... "free banking" is yet to become the norm, let alone even widespread, here in NZ, and I'm not sure that all banks even offer it - most accounts have a tarif scheme, either monthly flat rate or per transaction charges.

UK has free, low quality banking.

NZ has paid for, much better quality banking.

Which just goes to show, "Free" always costs _something_.

BACS

Forget cheques, the real ripoff is BACS clearance.

Apart from the 3 to 5 days clearance process, what really gets me is for an automated computerised electronic system, in this modern age of digital communications... why do the computers only work 9-5 Monday to Friday? !!

(having been hit with fees thanks to a credit card payment that didn't get through in time thanks to a weekend and bank holiday).