Building Society 10 days to clear a cheque

  Covergirl 12:32 11 Aug 2010

I haven't been in a BS for months, but last time I was they had a sign on the wall saying cheques presented today would be cleared by "10 days hence".

I wondered, why is it still 10 days clearance in this day and age when banks and BSs are nearly one and the same.

And has anyone ever noticed - present a cheque from your account (i.e transfer money from bank to BS) make a note of when the cash goes from your bank and make another note of when it appears in your BS.

Was there a gap of a couple of days ? If so, where does the money sit during this time frame?

And most important of all, who is raking in the interest on it? I wouldn't mind a small percentage of any interest earned! Ha Ha.

  wee eddie 13:01 11 Aug 2010

It enters your Account after 2, or 3, Working Days, but it has not been cleared at that point.

In other words, they put the Cheque Amount into your Account before they get confirmation, from the Writer's Bank, that there are sufficient Funds in that Account to cover the Cheque.

  wee eddie 13:03 11 Aug 2010

Not until the Writer's Bank has confirmed that there are sufficient Funds available to cover the Cheque, is it truly yours.

  Forum Editor 19:05 11 Aug 2010

in order to be cleared, and this takes time. It takes too long in my opinion, and could be speeded up considerably.

Here's what happens:-

On the day it is paid into a receiving account it gets processed by the payee's bank - it happens at the close of business, and involves the collecting bank's data centre passing information about each cheque over a secure electronic link to the paying bank's data centre.

On the following day the cheque will go to a central bank exchange centre where all the banks deposit cheques they've received, and collect cheques that are drawn on their accounts.

On the third day special staff in each bank look at the cheques that came from the exchange centre the previous day, and decide whether to clear them or not. At the end of each day all the banks pay each other the amounts due for the cheques that have been cleared - they pay out what's owing, and take in what they are due.

It's a long-winded procedure that could be made far faster if the banks made greater use of technology.

  Quickbeam 08:26 12 Aug 2010

But the days of the cheque are numbered, so why bother to spend money on a Dodo system of payment.

  jack 09:14 12 Aug 2010

When only the 'Rich' segment had bank accounts and cheques.
The rest of us were handed out our little slim brown envelopes on Fridays.
Then the archaic system could cope.
60 years ago in the City of London - little spotty herberts in bowler hats with cases[including me - but I didn't last] were to be seen scurry from bank to bank swapping paper.

If it still worked that way to day- we would need lorries trundling back and forth,
Strangely 'Instant Transfer' is in operation at some banks for some types of payment.

I do all my banking by telephone- [will not trust E-banking one iota]
When I request a payment to say, a utility or some other recipient- the operator will say - transferred immediately or will take 2/3 days- depending on the receiving bank.

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