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How to use banker’s drafts and cheques

Banker’s drafts and cheques are deposited in the same way, but issued differently. A banker’s draft is prepaid and issued by the bank. While a cheque isn’t prepaid. Both can be useful in different situations.

How can you use a cheque?

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You can use a cheque to pay someone, or get paid by someone.

Paying someone

You can pay anyone with a cheque if they accept it. Some businesses don’t accept cheques because there’s some risk involved if the cheque bounces.

Getting paid

Only accept cheques from people you trust. If it turns out that the cheque is a fake, or the person doesn’t have enough money to pay, it might be difficult to get hold of the money.

Cheque-writing basics

Writing cheques is simple and safe, as long as you get the basics right.

Make sure you:

  • Write the name of the person or organisation you’re paying.
  • Draw a line through any blank spaces on the cheque so people can’t add extra numbers or names.
  • Add details (such as a reference or account number) to the payee line. This makes sure the money ends up in the right place
  • Keep the cheque stub that contains the details and reference.
  • Make sure you have enough money in your account to cover the value of the cheque until the person has paid it in and the money has been deducted. If you don’t, some banks might charge you a fee for the bounced payment.

Cheque imaging

Some banks let you pay in a cheque using their mobile banking app by taking a photo of the cheque and submitting some details.

There is usually a limit to the size and number of cheques you can pay, such as a maximum cheque size of £500-£1,000 per day.

Money usually clears on the next day, Monday to Friday, but can take longer over the weekend or on public holidays.

Paying in a cheque in the usual way would take up to six days. So doing it digitally on an app is much quicker.

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When does the money leave/enter your account?

  • When you write a cheque, the money usually leaves your account three working days after the person pays in your cheque.
  • When you pay in a cheque, you’ll start earning interest two working days after it was paid in and be able to withdraw the money by the fourth working day. But you won’t be sure the cheque has cleared (the money is really yours) until six working days after you’ve paid it in. If you use the money in the meantime, you might have to pay it back.
  • If you’re paying the cheque into a savings account, you’ll start earning interest after two days, but won’t be able to withdraw the money until six working days after it’s been paid in.  
  • If you used cheque imaging to pay in your check, the money will be available within two working days – it’s often the next working day.

Cheques don’t have a date when they expire. But they’ll often be rejected if dated more than six months earlier. This is at the bank or building society’s discretion.

Stopping cheques and other cheque issues

Stopping a cheque

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If you think you made a mistake – for example, you wrote the wrong name on your cheque or you lost it – you can ask your bank to cancel it. There’s often a charge for this.

It’s important to keep the cheque stub that contains the cheque details and reference.

Finding out if a cheque will clear

If the person writing the cheque doesn’t have enough money, or is committing fraud, the cheque might not be paid and will ‘bounce’.

This means you won’t be able to keep the money.

If you need to know quickly whether a cheque will bounce, you can ask for ‘special presentation’.

This involves your bank sending the cheque to the bank that issued it, by first class post. Your bank will then confirm, by phone the next day, if the money will be paid. You’ll be charged for this service.

You won’t get the money any quicker, but you will find out if you’ll get it.

Out-of-date cheque rejections

Banks usually reject cheques that are older than six months.

To avoid problems with out-of-date cheques, make sure you pay in all cheques you’re given as soon as possible.

If someone you’ve paid asks you for another cheque – saying they’ve lost the original or that it’s gone out of date – ask your bank to stop the previous cheque first.

Post-dated cheques

A post-dated cheque is one with a future pay-in date on it.

It’s important to not write or accept post-dated cheques. If you pay in a post-dated cheque, it might be returned to you unpaid.

What is a banker’s draft?

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A banker’s draft, also known as a banker’s cheque, is like asking a bank to write a cheque for you.

You give them your money and they give you a cheque for that amount, to give to the person you’re paying.

For this reason, they do not bounce because of a lack of funds.

How long does a banker’s draft take to clear?

The money on a banker’s draft is accessible four days after it’s been paid in.

However, you won’t be sure it’s cleared (the money is really yours) until six working days after it’s been paid it in.

If you spend the money in the meantime, you might have to pay it back.

When should you use one?

Banker’s drafts are often used for larger amounts, and when people or organisations won’t accept a personal cheque.

There are many ways to transfer money to and from your bank account that can be faster and safer than using a banker’s draft.

Using banker’s drafts and cheques safely

Be careful when accepting a banker’s draft, especially for larger sums. This is because there are many fake drafts out there – for example, for car payments.

Banker’s drafts aren’t guaranteed against fraud. If you lose one or it’s stolen, someone else could use it fraudulently. So it’s important to take extra care.

Keep a record of each cheque you write on the stub in your chequebook. Check these against your statement and report any problems to the bank as soon as you can.

For larger sums, use a banker’s draft or a bank transfer.

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If you have a complaint about a cheque or banker’s drafts

If something has gone wrong with a cheque or banker’s draft, then you can make a complaint to the Financial Ombudsman Service (FOS).

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