Cheque clearing cycle and when money must be in account

PosterBoy77

I have an Intelligent Finance current account and a saving account where I can make instant transfers between the two like many banks offer. I was holding a fairly large sum of cash and thought it would be best to keep it in the savings account until it was needed in the current account. I wrote a cheque to pay a large chunk into another bank and deposited it on Thursday last week. I thought it would then be safe to leave the money in the savings account until Sunday. On Sunday evening I moved the money into the current account and it was transferred instantly. However the cheque was returned as unpaid by the other bank today. IF told me that the cheque had been presented to them on Friday.

Having checked the website http://www.bba.org.uk/bba/jsp/polopoly.jsp?a=367 It seems this is correct.

However the money would only get paid out on the Monday, even though it needed to be in the account on Friday so that the cheque would be honoured. However I was thinking though, that it may still have been possible to move the money into the saving account on Saturday evening and move it out again on Sunday evening to earn more interest.

Has anyone else ever tried to see what happens, or experienced what occurs in such a situation?

FridaysVictim

mikael wrote:

I have an Intelligent Finance current account and a saving account where I can make instant transfers between the two like many banks offer. I was holding a fairly large sum of cash and thought it would be best to keep it in the savings account until it was needed in the current account. I wrote a cheque to pay a large chunk into another bank and deposited it on Thursday last week. I thought it would then be safe to leave the money in the savings account until Sunday. On Sunday evening I moved the money into the current account and it was transferred instantly. However the cheque was returned as unpaid by the other bank today. IF told me that the cheque had been presented to them on Friday.

Having checked the website http://www.bba.org.uk/bba/jsp/polopoly.jsp?a=367 It seems this is correct.

However the money would only get paid out on the Monday, even though it needed to be in the account on Friday so that the cheque would be honoured. However I was thinking though, that it may still have been possible to move the money into the saving account on Saturday evening and move it out again on Sunday evening to earn more interest.

Has anyone else ever tried to see what happens, or experienced what occurs in such a situation?

I believe what normally happens would be :
You pay the cheque in on the Thursday .
On Friday the clearing system tries to clear the cheque and IF funds are available (as they weren't in your example) they are transferred to the receiving bank .
On the following Monday the receiving bank would see they have funds and would allocate them to your account held with them .

PosterBoy77

FridaysVictim wrote:

I believe what normally happens would be :
You pay the cheque in on the Thursday .
On Friday the clearing system tries to clear the cheque and IF funds are available (as they weren't in your example) they are transferred to the receiving bank .
On the following Monday the receiving bank would see they have funds and would allocate them to your account held with them .

Thanks for that info. What you say makes sense, but in my expereince with any cheque payments I have ever made, the money seems to actually only transfer out of the account on which the cheque was drawn, on the 3rd working day.

Mikeyorks

It actually transfers out overnight between the 2nd and 3rd days - you only 'see' that fact during the 3rd day.

Diagram of the Clearing Cycle here :-

http://www.apacs.org.uk/payment_options/documents/Cheque_Clearing_Cycle_diagram.pdf

It's an interesting concept to attempt to make use of the money between the 2nd (Friday) and 3rd (Monday) day. But I think it would fail unless you had an overdraft big enough to take up the slack - as the amount in the current account would be 'reserved / pending' in overnight Batch on the Fri?

Obviously a different story had you made Friday the Day 1.