Banks - Why so long for cheques to clear?

Question

In todays modern technological society why does it still take 3 days to clear a cheque through the banking system......

Answer 1

In one word, so the bank makes interest (money) off of them. There is one bank I think its Lloyds Tsb although I may be wrong that a cheque if took there before 3 will hit your account that day

Answer 2

The cheques go through a clearing house and then back to the issuing bank all in all which can take two weeks.

The banks use the funds to earn from while in transit, and while in 3 days it can be in your account as cleared funds, it can be ten days before they know that it has definitely not bounced. And if it does bounce they want their money back.

They have been using delaying tactics for years and years to not speed up the system so they can continue to make money from the process. The government have been pathetic at bringing them to heal on this matter.

Answer 3

In the UK, it is still a legal requirement to present the payer's account holding branch any paper instruction to pay someone else. In other words, if I write a cheque, my bank branch has to see the cheque else the payment can be stopped legally on these grounds (in practice so long as the issuing bank as opposed the issuing branch has the cheque they will not use this law to stop pyament). It takes time to process the cheque because you have to allow at least one business day for the cheque to be physically transported from the receiving bank to the issuing bank and at least one further business day to check the acocunt funds.

Answer 4

What they will tell you: 3 to 5 days for in state/local checks 7 to 10 days for out of state checks - In reality, it's often much less time than this. Careful with BofA. Make sure those funds are completely cleared before you use any funds. You are playing with snakes (banks). Don't get bitten.

Answer 5

Chilly Willy is partially right, banks do earn interest on floating checks. But when you issue a paper check, it has to be deposited into the payee bank, then gets processed and goes to the regions Federal Reserve Bank, then goes to the payors bank to check funds availability,and then gets returned to the payor as a cancelled check (if funds clear). With transit time, this may take up to 7 to 10 business days. My advice, use electronic payment or electronic bill pay. It really cuts down on transit time.

Answer 6

You can call your bank and have them verified that the check has cleared and have them release the funds. Most banks will do this. It usually only takes 1 - 2 days for local checks.

Answer 7

It does not take that long that make it take that long so they can keep the money longer

Answer 8

three working days

Answer 9

So they can earn interest on the float.