Uncertainty reigns over when a cheque clears - Banking - News - Moneyfacts

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Uncertainty reigns over when a cheque clears

Uncertainty reigns over when a cheque clears

Category: Banking

Updated: 27/04/2011
First Published: 30/11/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There is widespread confusion over how long it takes before a cheque cannot be bounced, according to new research.

Changes were made in 2007 to ensure that the process of funds clearing after paying in a cheque was speedier and more reliable.

Consumers and businesses only have to wait six working days after paying in a cheque before they can be safe in the knowledge that the cheque cannot be bounced.

Before this change, a cheque could have bounced weeks or even months after it had been paid in, potentially leaving customers who had spent cheque funds out of pocket.

Despite this, research by the Cheque & Credit Clearing Company has found that just one in 100 people know how long they have to wait before they can be certain the money is theirs.

Worryingly, almost eight in ten (79%) wrongly believe funds to be theirs earlier than is actually the case.

Some 15% admitted to being unsure as to the timescale of money clearing after paying in a cheque.

Businesses fared equally poorly as only 2% correctly identified that you have to wait until the end of the sixth working day before you can be sure that the cheque funds are yours.

Eight in ten (82%) think that the timescale is earlier than six working days, while 9% are unsure or have no idea of when a cheque has safely cleared.

It is particularly important that businesses are aware of the cheque clearing timescales given that on 30 June 2011 the Cheque Guarantee Card Scheme is being withdrawn, meaning that after this date consumers will no longer be able to pay for goods and services using a cheque guaranteed with a plastic card.

"Although only a tiny percentage of the cheques being processed every day are actually returned unpaid it's still disappointing that so many people are unaware of when cheque funds are definitely theirs to keep," Angela Thomas, managing director of the Cheque and Credit Clearing Company, said.

Cheque usage has declined significantly in recent years, and it was announced last year that they are to be phased out by 2018.

The move was not universally welcomed, however, as critics said that many people, in particular pensioners and businesses, relied on using cheques.

As of 30 June 2011 businesses will still be able to accept cheques. However, many retailers have chosen to stop accepting them as more and more shoppers pay for goods and services by debit card (which usually comes with a current account) , credit card or cash. Find the best credit card rates

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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