LLoyds TSB offers instant interest on cheques

freesave

Thought this article may be of interest to you all.

Lloyds TSB offers instant interest on cheques

Fiona Walsh
Wednesday April 26, 2006
The Guardian


Lloyds TSB is to pay instant interest on cheques paid into personal current accounts, rather than making customers wait several days for them to clear.
It claims it is the first to make such a move, effective from today, which applies to cheques up to £1,000.

Bernard_Coleslaw

freesave wrote:

Lloyds TSB is to pay instant interest on cheques paid into personal current accounts, rather than making customers wait several days for them to clear.

And this will be at the the interest rate of 0.10%, unless you pay in £1000 or more per month. Wow!

It claims it is the first to make such a move, effective from today,

Well, it isn't. I can think of at least one place (Coventry BSoc) that's been doing this, on all accounts (including proper interest-bearing savings accounts) for years. I'm sure there are probably others too.

which applies to cheques up to £1,000.

Gosh, I can hardly believe the generosity of Lloyds here. So if you put a whopping great big cheque in, they'll still make you wait for the interest.

Must be a slow news day. :rolleyes:

BC

taylornj

Saw the same news on Working Lunch, about Llyods TSB. A little more behind this as OFT are investigating banks over this clearing time. Good reason to switch accounts I think not. Others banks may think they have to keep up and do the same looking forward to that. As pointed out electronic transfers will still take 3 days to complete until changes are impletemented in 2007.

The good thing explained on Working Lunch was during the three days until the cheque cleared both parties would getting the interest on the money.

Hatching a little scheme if in practice this instant crediting of cheque comes about, for a number of accounts with high interest. Then writing a cheque to myself I could get extra interest on up to £1000 at a time, maybe doubling the interest rate for a short period. All I need to do is keep writing sets of cheques between my various current accounts every day, you may think every 3 days, but there is nothing to stop overlaping cheques and getting even more interest. Might not be a good idea to depend on the post for this as timing is critical. Looking like this could be a good way to pay back banks for taking so long to clear cheques. Downside having to go to the banks nearly everyday.

There is a danger if cheques do not clear for some reason and you could become overdrawn in one account - just need careful management of accounts. Other problems are moving between interest rate bands from high to very low rates of interest, some accounts with high interest on upto 2,500 then drop to moreless nothing for example.

Two accounts with different banks A & B both with opening balances of £1000 these two account have interest of 4% net on up to £2,500.

Day 1 -
Pay in cheques to A & B for £500 - Balance £1500
Day 2 -
Pay in cheques to A & B for £500 - Balance £2000
Day 3 -
Pay in cheques to A & B for £500 - Balance £2500
Day 4 -
Pay in cheques to A & B for £500 - Balance £3000
Cheques from Day 1 clear - Balance £2500
...........
Day n -
Pay in cheques to A & B for £500 - Balance £3000
Cheques from Day n-3 clear - Balance £2500

You have only £2000, but you get interest as if you have £5000 in the accounts so instead of 4% you are getting close to 10% (take couple of days to get to running balance of £2500).

straws

I'm confused now! I read this article in the Times today and it says:
'Lloyds TSB has ended its three-day clearing cycle in a move that will benefit millions of customers
CUSTOMERS of Lloyds TSB will from today be able to draw out cash from their account on the day that they pay it in by cheque.'
It said it will also pay interest immediately, but the main point is you don't have to wait for your cheques to clear anymore.

lamb7994

straws wrote:

I'm confused now! I read this article in the Times today and it says:
'Lloyds TSB has ended its three-day clearing cycle in a move that will benefit millions of customers
CUSTOMERS of Lloyds TSB will from today be able to draw out cash from their account on the day that they pay it in by cheque.'
It said it will also pay interest immediately, but the main point is you don't have to wait for your cheques to clear anymore.

If anyone wants to read the full article here's a link:

Lloyds Tsb Press Release


James

jonesMUFCforever

straws wrote:

I'm confused now! I read this article in the Times today and it says:
'Lloyds TSB has ended its three-day clearing cycle in a move that will benefit millions of customers
CUSTOMERS of Lloyds TSB will from today be able to draw out cash from their account on the day that they pay it in by cheque.'
It said it will also pay interest immediately, but the main point is you don't have to wait for your cheques to clear anymore.

Oh dear the standard of journalism on the Times have slipped drastically!
This is completely wrong.They will pay you interest on a cheque up to £1000 provided it is paid into an interest bearing current account. If you have a credit balance then it is virtually of no importance but if your account is overdrawn then you stop paying interest on the amount of that cheque (up to £1k) on the working day it is paid in.
It makes no difference to the clearing cycle and you still cannot withdraw funds against an uncleared cheque.

Sillychuckie

If the cheque bounces, am I right in assuming that they will recover the cost of the interest you might have earned on the money?

I am thinking of writing myself a cheque (from another account) for afew million pounds.
I'll be sure not to spend it when lloyds credit it, so a few days later, it is removed from my account... but a few days worth of interest on a couple of mill. Won't turn that down.
:rotfl:

lamb7994

Sillychuckie wrote:

If the cheque bounces, am I right in assuming that they will recover the cost of the interest you might have earned on the money?

I am thinking of writing myself a cheque (from another account) for afew million pounds.
I'll be sure not to spend it when lloyds credit it, so a few days later, it is removed from my account... but a few days worth of interest on a couple of mill. Won't turn that down.
:rotfl:

I assume they would recover the interest costs and also you'd have the returned cheque charge as well.
The instant interest on cheqyes only applies for cheques upto £1000

J

thecotswolds

No, I checked with LTSB and if the cheque is returned unpaid they do not claw back the interest.

urz100

thecotswolds wrote:

No, I checked with LTSB and if the cheque is returned unpaid they do not claw back the interest.

I suppose it make sense becuase it's not as if you can earn a large amount of interest off the cheques before they clear.

Thanks

Jamie

jonesMUFCforever

Sillychuckie wrote:

If the cheque bounces, am I right in assuming that they will recover the cost of the interest you might have earned on the money?

I am thinking of writing myself a cheque (from another account) for afew million pounds.
I'll be sure not to spend it when lloyds credit it, so a few days later, it is removed from my account... but a few days worth of interest on a couple of mill. Won't turn that down.
:rotfl:

Won't work as only cheques up to £1000 being paid into an interest bearing current acount apply.
You also have to have a full account not a cash or basic account.