Time for banks to clear money

Debt_Free_Chick

GSD4ME wrote:

But I will investigate this free banking and see what I can get, thanks for mentioning it.

I think the reference was possibly to something like the Abbey National business account, which is free.

regularsaver1

Debt free chick i wouldn't reference to Abbey National - no way

many banks do it - A&L, Bank of Scotland through Halifax, and others that I can't think of right now

Woby_Tide

Al_Mac wrote:

Lloyds is leading apparently:cool:

I doubt that very much, their attitude and commitment to technology is quite a way behind other companies in the industry

MPH80

The reduction of clearing time IS coming down - but for very specific things.

They are reducing the amount of time on internet and phone transfers.

http://www.fool.co.uk/news/comment/2005/c051216f.htm

Basically - summer 2007 this will all come online. All electronic transfers that take place over the internet or phone will take 'hours'.

There is a comment about the OFT and cheque clearing. According to the OFT press release from the set up of the group - the report is due out Summer 06 - so soon:

http://www.oft.gov.uk/News/Press+releases/2005/211-05.htm

M.

(Edited to correct link from Motley Fool)

Mikeyorks

GSD4ME wrote:

The entire point I was trying to make is that it DOES not take 3 days to clear cheques.

Perhaps you mean it 'shouldn't take 3 days'? As it is a fact ... that it does take 3 days to clear cheques. And the APACS rules are quite clear that it should take 3 days and you're not allowed to attempt to shorten the cycle (which is not the same as saying that Banks can't allow you to draw value earlier).

As to your other point regarding the extra days added by Banks. The clearing cycle is in diagram form in the first link on the right here ('Cheque Clearing Cycle' ... apologies - can't give a direct link to the PDF) :-

http://www.apacs.org.uk/payment_options/cheques_draft.html

.....and the answer to the extra days is contained in the orange boxes at the bottom. In that dishonoured cheques take at least one extra day to be returned to the original processors Bank - and then they have to debit your account so you don't draw on it / advise you in order you can follow it up. Whether you consider the extra time is reasonable in the light of the small percentage of failing cheques overall - possibly depends if you've ever suffered as a result of one bouncing?

As regards speeding the process. It's virtually doable right now with existing mechanisms. All it takes is that the IBDE files produced at the first point of clearing - when the paper cheque is converted to electronic data - is used directly. And the paper cheques are 'truncated' and left at the point of origin - but accessible if there is a query / security issue. And that - will basically take 1 day off the existing 3. It does remove some 'checks and balances' from the existing system and the dilemma is how to insert them into a wholly electronic exchange.

But - there is an average 6.5M cheques in transit daily. And everyone talks about these being 'paid into the Bank' - whereas the reality is that most are paid into CC companies / DVLA / Royal Mail / HMRC / etc etc. And all these organisations also feed into the clearing cycle and have to be accounted for.

All these 'payments out', as above, would also be speeded up - so you would lose your money faster. It doesn't work if the credits / debits don't run at the same pace.;)

GSD4ME

Thank you for the information, buy I have two points to raise.

Firstly I have had cheques bounce and I have found that the bank clears them in their usual five days, credits them to my account and then about 2 - 3 days later takes them out again, so the extra days do not cover cheques bouncing.

Secondly why do credits take longer than debits. Cheques paid in, even at my own branch take 5 days to appear in my account. If I pay a bill by cheque that is somehow miraculously whisked out of my account on the same day if paid at my branch or 2 days later if paid in elsewhere.

It all seems very unfair!!

jonesMUFCforever

Why do you think a bounced cheque takes longer to get to you?
On the 3 rd day it will get bounced back to your bank (same day as a cheque would be debited from your account the other way round) and then an extra day to be returned to you.

GSD4ME

I'm sorry. maybe I am not making myself clear.

I have no objection at all to banks taking 3 days to clear a cheque, it has always taken three days and I fully understand why. What I object to is that most banks have extended this period to 4 or even 5 days. Why? They say it is to cover bouncing cheques, but as I said above I have found that bounced cheques take about 8 or 9 days to come back to your account, so the banks are not waiting for any potential bounced cheques before they clear the cheques in 5 days.

It just seems to me that there is no rational explanation for why it takes longer now to clear cheques than it did in the 1960s.

Mikeyorks

GSD4ME wrote:

Firstly I have had cheques bounce and I have found that the bank clears them in their usual five days, credits them to my account and then about 2 - 3 days later takes them out again, so the extra days do not cover cheques bouncing.!!

Most cheques bounce (STOP put on them / insufficient funds) as soon as they touch the account they're drawn on. They will generally be returned well within the 4/5 days quoted - but it then depends on your Banks dishonoured cheque workload as to whether they action them immediately. And bouncing cheques can be 'seasonal', just as countermanded Direct Debits peak around Summer holidays / Christmas.

But other cheques will settle on the accounts they are drawn on - and only bounce when the account holder checks online / statement and persuades their Bank to subsequently dishonour it (unsigned / wrong date / words figures differ / needs 2 signatures etc). They will obviously take extra days / weeks or even months - depending when the account holder checks. They're more unusual - and can be deliberate, bearing in mind few people have their paid cheques returned to them these days?

Secondly why do credits take longer than debits. Cheques paid in, even at my own branch take 5 days to appear in my account. If I pay a bill by cheque that is somehow miraculously whisked out of my account on the same day if paid at my branch or 2 days later if paid in elsewhere.

Cheque credits don't take longer than cheque debits. Once they are into clearing there is absolutely no distinction, and all clear in the same 3 days. That is why a cheque 'paid in elsewhere ...is debited 2 days later'.

But I simply don't understand how a cheque ('for a bill') paid at your branch - is debited immediately. I can only presume you're providing a payment slip with it that means it's being paid by BACS?? So - essentially the cheque is being treated as cash - hence the immediate debit?

But equally puzzled as to why you would pay a bill by cheque into your Branch? They're not a postbox? If you want to maximise the period to losing your funds - post it to your creditor!

boo_star

Cheque credits don't take longer than cheque debits. Once they are into clearing there is absolutely no distinction, and all clear in the same 3 days. That is why a cheque 'paid in elsewhere ...is debited 2 days later'.

But I simply don't understand how a cheque ('for a bill') paid at your branch - is debited immediately. I can only presume you're providing a payment slip with it that means it's being paid by BACS?? So - essentially the cheque is being treated as cash - hence the immediate debit?

If you pay a cheque and the payee uses the same bank, it will be debited immediately.

It won't be taken from your account, but it will reduce your "Available balance" by however many pounds and pennies that the cheque is.

But equally puzzled as to why you would pay a bill by cheque into your Branch? They're not a postbox? If you want to maximise the period to losing your funds - post it to your creditor!

If they use the same bank it's the fastest way to get a cheque paid in.

If it's the same branch it'll be a few hours.