British consumers hit by wait for cheques

CONSUMERS in Britain are losing out on interest payments because banks there generally make them wait at least three working days for a cheque to clear, according to new research published yesterday.

Financial information group Defaqto said 56% of current accounts made people wait for three working days before they started to earn interest on a cheque they had paid into their account, with some banks making people wait for four days.

But at the same time 80% of banks stopped paying interest on the day a withdrawal was made.

David Black, Defaqto's head of banking, said: "Clearance times can often be a source of great annoyance to customers.

"Ignorance of the clearance cycle can result in customers becoming unknowingly overdrawn or having a cheque that has been written, bounced and being hit by the resultant charges.

"The technology must be developed to make the transacting of money instantaneous. Dissatisfaction with bank service is reflected in our survey which shows nearly one in five people who have moved accounts were unhappy with their previous account."

The group, which looked at 75 current accounts, said people could be charged as much as stg£39 (€56) a time if cheques bounced or they did not have enough money to meet standing orders and direct debits, possibly as a result of money they had paid into their account taking so long to clear.

The cheque clearing cycle can be even longer in Ireland, however, with some banks only giving credit for cheques five days after they are originally lodged.