Time to Clear a Cheque

With effect from 3rd December 2007, the Office of Fair Trading (OFT) will introduce a new 'customer promise' that aims to clarify the banking industry's cheque clearing cycle.

The OFT 'customer promise'

In summary the OFT 'customer promise' will clarify:

• when you will start to earn interest on a cheque deposit
• when you can withdraw against the cheque deposit, and;
• when a cheque can no longer be debited from your account without your permission (cheque clearance in this instance known as 'certainty of fate').

The maximum cheque processing timescales set out by the OFT 'customer promise' are as follows:

T = Transaction day: The day a cheque deposit will appear as a credit on your account

T+2 = Transaction day plus 2 clearing days: The day you will start to earn interest on a cheque deposit. Or, the day the value of the cheque deposit will start to reduce the interest charged on your overdraft.

T+4 = Transaction day plus 4 clearing days: The day you can withdraw against the cheque deposit in your current account. (Until 'certainty of fate' is reached a cheque can still be returned unpaid and the deposit removed from your account).

T+6 = Transaction day plus 6 clearing days: The day you can withdraw against the cheque deposit in your savings account.

T+6 = Transaction day plus 6 clearing days: The last day the cheque deposit can be debited from your account without your permission. After this day you will have 'certainty of fate'.

Please note: Clearing days are equivalent to business working days and do not include weekends or bank holidays: example - if T is Monday then T+2 is Wednesday, or if T is Friday then T+2 is Tuesday. There may be limited circumstances beyond the bank's control, where payment or non payment of a credited cheque may be delayed or not presented. For example - if the cheque is involved in a fraudulent situation.

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