A cheque is a written order from an account holder, instructing their bank to pay a specified sum of money to a named recipient. Cheques are not legal tender but are legal documents and their use is governed by the Bills of Exchange Act 1882 and the Cheques Acts of 1957 and 1992.
You should ensure that you have an account which best suits your needs. If quicker access to cheque funds is important, you should shop around for an account which offers more favourable terms. Some accounts allow early access to funds from a cheque, sometimes as early as the day you pay in the cheque.
However you should be aware that the funds aren’t definitely yours to keep until the end of the sixth working day after paying the cheque in. If you withdraw the funds and the cheque is then returned unpaid (i.e. bounces) before the end of the sixth working day, in most cases the bank will ask you to give the money back.
Anyone who needs a quicker way to pay or receive money should use an online, mobile or telephone banking payment, which can typically be made in a few minutes.
You should speak to your bank or building society to try to resolve your issue. If they do not resolve it, under the Banking Conduct of Business Sourcebook (BCOBS), banks and building societies are required to tell you how to make a formal complaint. Ultimately you can refer a dispute to the Financial Ombudsman Service.
The vast majority of cheques are paid and do not bounce. Only around 0.5% of all cheques are returned unpaid each day.
The typical reason for a bank to bounce a cheque is because a customer does not have enough money in their account to pay the cheque or they have used all of their overdraft facility. In addition, when a bank spots a fraudulent cheque it will bounce it. But banks also bounce cheques because: the cheques have not been signed correctly (e.g. one signature when two are required) or perhaps not signed at all; because they are more than six months old or post-dated; or corrections have not been signed or initialled; or because the amount in words differs from the amount in writing.
No. A cheque is valid for as long as the debt between the two parties (i.e. the person writing the cheque and the person they give it to) exists. In other words, cheques don’t have an expiry date. However, it is common banking practice to reject cheques that are over six months old to protect the person who has written the cheque, in case the payment has been made another way or the cheque has been lost or stolen. This six-month timeframe is at the discretion of individual banks. It should not be assumed that cheques older than six months would automatically be rejected as the only definite way to cancel a cheque is for the person who wrote it to request that a stop be placed on it. If you have a cheque that you want to pay in that is more than six months old, your best course of action is to not pay it in and instead obtain a replacement from the person who gave it to you. Where there is a dispute, a cheque remains legally valid in order to provide proof of the existence of a debt for a period of six years, which is the Statute of Limitations.
Yes. You have a legal right to stop a cheque before the cheque has been paid (Bills of Exchange Act 1882). However, there is be significantly less time to do this with cheque imaging as the clearing timescales are much quicker and the recipient might pay in the cheque via a mobile banking app. If they do, it means that the clearing process will begin sooner than if the cheque recipient has to visit a bank branch to pay it in.
There are also limited circumstances in which stopping a cheque is permissible, as has always been the case. You should talk to your bank or building society first.
In the old days, when cheques took six days to clear, if you received a cheque and you wanted to know as soon as possible whether it would be paid, you could ask your bank to present that cheque ‘specially’. The bank then sent the cheque by first-class post directly to the payer’s bank, contacting them by phone on the following weekday to confirm whether it would be paid. Banks call this “certainty of fate”.
However, with the advent of cheque imaging, the quicker clearing timescale typically provides certainty of fate at the end of the next weekday after paying a cheque into a bank account, so customers are much less likely to need a cheque to be specially presented. Because of this, fewer banks will be offering this service and it may not be for all cheques that are paid in so you will need to talk to your bank to find out more.
You may be able to but with the advent of cheque imaging, the quicker clearing timescale typically provides “certainty of fate” that the cheque won’t bounce at the end of the next weekday after paying a cheque into a bank account, customers are much less likely to need a cheque to be specially presented. And because of this, fewer banks will be offering this service and it may not be for all cheques that are paid in, so you will need to talk to your bank to find out more.
No. Most cheques are crossed 'A/C Payee'. The Cheques Act 1992 and Section 81 of the Bills of Exchange Act 1882 give statutory power to the ‘A/C Payee’ crossing when it is used. The rules mean that a cheque which bears the ‘A/C Payee’ crossing can only be paid into an account in the name of the recipient exactly as it appears on the cheque. Similarly, a cheque payable to two people (normally known as a joint account) can only be paid into an account in the name of the two people exactly as they appear on the cheque. The crossing cannot be deleted, nor can the cheque be transferred over to a third party.
First, check with your bank to ensure the original cheque that you issued has not already been paid. If you're happy that the cheque has not already been paid you should place a stop on the original cheque (there may be a cost for this) and, if you wish, issue another cheque which the person you give it to can then pay in. Alternatively you may prefer to make the payment by other means.
This situation may arise if you pay the cash into your account via a bank other than your own. As your cash deposit is typically accompanied by a paying-in slip, this piece of paper has to be turned into to a digital payment message that goes through the Image Clearing System, which means the deposit will get to your bank and into your account by 23.59 the next weekday after you paid the cash in.
Cash paid into your own bank will be credited to your account on the same day provided you paid it in on a weekday before the bank’s advertised cut-off time.