Why does it take 3 days to clear a cheque?

[Gayle]

In the old days I fully understand that 3 days to clear a cheque was reasonable

1 day to post the cheque to the right bank
1 day for them to process and authorise payment
1 day to return it to the presentees bank and the money to go in the account.


But now - a transaction can be done at the drop of a hat - surely a bank can do this quicker than three days.

I was once told that when cheques were processed, the middle day was when the money was sort of floating around in banking ether and the banks were using it for investment to make profit. That's fine, but surely even if they wanted to do that they could still process it in a day or two, but not take three. They hold our money to ransom for three days now.

For example, i wanted to transfer some money from one account to the other on the internet. I could see both accounts on screen. Yet for three days, the money isn't in either of my own accounts. Can this be right?

[Royboy39]

I can transfor money from a Sterling Account to a Euro Account online in one day.
When the request is made for transfer the payment is transfered at the end of trading and the money appears in the Euro Account the following day.

[Mick]

Gayle if you give me all your bank details i will do a test transfer from your bank and let you know how long it takes

[Tealeaf]

It's quite simple Gayle....the banks hold on to your money for three days in order to accrue interest to make the money to pay the bankers the salaries they so richly deserve.

[jaysay]

I thought that banks were cutting this time down, now that modern tech can be used, I'm sure I saw something not that long ago regarding this issue, where's ntwisi when you need him

[Tealeaf]

Originally Posted by jaysay

I thought that banks were cutting this time down, now that modern tech can be used, I'm sure I saw something not that long ago regarding this issue, where's ntwisi when you need him

Now we're going to end up with another advertisement for Barclay's Bank...

[jaysay]

Originally Posted by Tealeaf

Now we're going to end up with another advertisement for Barclay's Bank...

Well you win some and you lose some Tealeaf

[entwisi]

<Warning> The following may be seen as an advertisement by those of small mind <Warning>

Paper money ( i.e. cheques still go through teh same process that they always have. i.e. its all postal/physical transfer rather than electronic.

Now SOME Banks ( I shall let you guess who! ) pay you interest on the value from teh day you deposit it and also to draw against it from Day 1 ( You obviously take the risk of it bouncing and teh funds being withdrawn but hey what do you expect) .

The whole Payments Systems between Banks are mega complex and transfer immense amounts of money every single Day. I should know I look after a lot of them!

To be honest, the cheque system is one that is dying on its feet and all Banks would like to see teh back of them as it costs a massive amount more to process a cheque over an electronic transfer.

The final thing I will repeat from previous posts is that here in teh UK you are actually very lucky. If you stay in credit your everyday banking is free whichit isn't in a lot of other 1st world countries. you have access to a very expensive to install and maintain ATM network and the bank with standing orders Direct Debits etc allow you to automate a lot of the admin of running your finances that in the 'good old days' you had to do yourself. Just take a look at how many payments you make out of your account on a monthly basis and then times that by about 10 mins each for the time you would have been stood ina Q somewhere to pay in the old fashioned method.

Your Banks to most people offer a very very good deal.

[pashley]

What's equally annoying is the astronomical sums they charge to transfer money overseas. I regularly send money to support an Indian orphan and each transaction costs £25, maybe even more now. This transfer is done elctronically, so to push about twenty four buttons costs a pound a time. Scandalous!

[Studio25]

Originally Posted by entwisi

...To be honest, the cheque system is one that is dying on its feet and all Banks would like to see teh back of them as it costs a massive amount more to process a cheque over an electronic transfer...

I've always thought that this is exactly the reason banks make cheques clear over three days: Technical advances in the rest of the system make transfers instantaneous, but you have to employ someone to do manual labour with cheques. Even though cheque clearing should be as instantaneous as a bank transfer, making it take days rather than seconds makes it a much less attractive technique, so demand (or lack of it) will kill off the cheque.

[derekgas]

Bank transfers between customers in the same bank happen immediately at my bank, cheques take between 3 and 5 working days, this causes problems sometimes, it used to be that, if you took a cheque to the bank of the writer, and you were in the same bank, you could draw the cheque there and then, but you cant do this at my bank now.

[emamum]

i paid for something by paypal echeque and that takes 7-9 days to clear!

[flashy]

i gave Ian a cheque 3 weeks ago and its only just cleared

[entwisi]

Posted via Mobile Device
Thats because cheques are as much a pain to me to administer as they are to the banks and i have to make a journey to the bank to process it. it only got paid in last weeekend.

[flashy]

lol i know, i did say the other week i'd swap it for cash though