Why does it take 5 working days for a cheque to clear?

Question

What are the new cheque 21 rules?

Answer 1

It takes 5 days because:
Day 1- Monday
Let's assume the bank receive your cheque on Monday, and that they manage to bank it the same day before the cut-off time.They will call this day 1.
Your bank send your cheque to the bankers central clearing centre. If they bank your cheque after 3.30, it will not get processed until the next day. Occasionally banks have computer problems, and cheque processing gets delayed.

Day 2 - Tuesday
Your cheque should arrive at central clearing, provided there are no delays.

Day 3 - Wednesday
Your cheque arrives back at your own bank, providing there are no delays. Your bank normally has until 3.30 to return your cheque or pay it. The debit transaction should show up on your statement.

Day 4 - Thursday
If your cheque has been paid, nothing happens. If the cheque was returned unpaid, it should be received back by your bank, providing there have been no delays. For large amounts your bank may telephone us to advise you, but it is not obliged to do so. Your bank shows our Monday cheques as cleared for interest calculation purposes. Your bank can exceptionally still return your cheque today.

Day 5 - Friday
You may receive a notification from our bank by post if your cheque has been returned unpaid, providing there have been no delays in the post or elsewhere in the system.

You start earning interest on your cheque on the 3rd day

Answer 2

Initially this began so the bank had time to take the cheque by stage coach to its head office to be cashed there and the money taken to the branch by stage coach and deposited into the account of the beneficiary.
However as technology moved on past the ages of horse drawn coaches the banks did not update the cheque clerance time as it gave them a few days where the money would float between accounts and they would get the interest on the money for these days. The interest on several thousand clearing cheques every day adds up to a lot of money over a year.

Answer 3

I would like to know that actually, especially when the cheque is from the same bank, they take the money from my bank straight away when I use a debit card, so how come so long for a cheque.

I have been told though its because, the bank holds on to it for so many days to gain interest on it, in a holding bank, to gain the interest. Not sure how true that is though.

Answer 4

if you have a cheque account it will only take 3 working days. x x

Answer 5

It is because the banks can take that money and invest it and make lots of money! Remember it used to take 3 working days, now with the advent of technology that can instantaneously transfer money it takes 5 so they can hold onto the cash longer.

Answer 6

It's a complete con - it's just the banks creaming off interest in a holding account for three or four days. We should all sue the banks for that interest which should rightfully be ours! I'm sure they owe me at least twenty thousand quid by now (don't want to be greedy!)

Answer 7

It shouldn't. with the new Check21 rules in place, checks are cleared almost as quick as a debit card transaction when processed.

What is more likely is that it'll take 4 days for someone to bother getting to it.

Answer 8

Because it needs to be chequed out... lol

Answer 9

It does take a few days to get to the bank and for a human to process it, rather than direct debit which is automatic.

They also use your money for a couple of days, that's how they make their profits.

Answer 10

It gives the banks time to reinvest YOUR money and keep the interest. Other countries can do it within hours, yet another uk rip off, that we all accept as normal.