How long does it take a cheque to clear?

Cheques are not as popular as they once were, but they are still a useful method of sending money to someone. And in more recent years, the check-clearing process has been modernised to be far more efficient than in the past. So, how long does it now take for a cheque to clear? This article gives you the answer.

How long does it take for a cheque to clear?

Thanks to technological improvements in the financial sector, cheques now normally clear within one working day, depending on the time and day it’s paid in.

For example, paying in a cheque on a weekday before the bank’s deadline likely means it will be cleared before midnight of the following day. But when a cheque is paid in on the weekend, the clearing process will likely not be completed until midnight of the following Monday.

Usually, a bank’s deadline will be around 3.30 pm to 4 pm. But, if someone misses the deadline, the clearing process may take an additional working day to clear.

Nevertheless, even with this delay, the processing time is significantly faster than in the past, thanks to the adoption of the Image Clearing System.

What is the Image Clearing System?

In the past, all checks handed in at a bank were processed using the archaic Paper Clearing System. This required banks to physically transfer paper cheques between each other through a clearing centre, making it labour-intensive and slow. This is why cheques used to take anywhere between three to six working days to clear.

However, in October 2017, the Cheque and Credit Clearing Company (C&CCC) announced the launch of a new Image Clearing System. This technological upgrade allowed banks and building societies to send and receive electronic images of paid-in cheques securely, eliminating the physical paper trail and replacing it with a digital one.

The end result was a massively accelerated and simplified cheque-clearing processing. Since 2019, every bank and building society in the UK now uses image-based clearing to process cheques. And it’s how the amount of time it takes for a cheque to clear has been reduced to a single working day.

How does the cheque clearing actually process work?

Under the new system, the bank sends the digital image of the cheque to the Image Clearing System, which is run and managed by the C&CCC.

Once a cheque request has been received, the Image Clearing System verifies and identifies the details of the originating account and destination account.

An approval request is then sent to the individual who wrote the cheque for extra verification to combat fraud. This is also where the balance of the originating account is checked to ensure there are sufficient funds available for the transfer of money.

If everything is approved, the settlement is undertaken by the Bank of England before payment is forwarded to the depositor’s bank, which then makes the funds available before midnight.

Why was the process changed?

Banking continues to change and evolve in the digital age. It was also essential that the old paper-based cheque-clearing system be modernised.

The new system doesn’t just reduce the cheque clearance time. It also introduces a host of new capabilities that provide depositors with maximum flexibility. For example, paying a check is now as simple as taking a picture using a mobile banking app rather than travelling to a local branch to hand it into a machine or bank teller.

Reasons why a cheque deposit might be delayed

Despite the superior speed of the Image Clearing System, cheques can still sometimes get delayed. There are a few reasons why this can happen, including processing errors, bank holidays, missing the deposit deadline, incorrect bank details, fraud prevention, and anti-money laundering practices.

However, the most common cause is simply that the originating account simply doesn’t have sufficient funds to complete the transfer.

To prevent a cheque from bouncing, banks and building societies may hold deposits for up to seven days to give time for the cheque writer to ensure sufficient funds are moved onto the account. If there are still insufficient funds by the end of the holding period, the transaction is cancelled, and the cheque bounces.

How to deposit a check at a bank

There are lots of ways to deposit a cheque today. The classic approach is to simply take the completed cheque slip to a local branch and hand it over to a bank teller or self-service deposit machine.

Alternatively, most mobile banking apps now provide the option to just take a picture of a cheque and submit it online. This has the added benefit of being able to complete it from the comfort of home rather than travelling to a physical location.

Do cheques expire?

In the UK, a cheque is typically considered void if it’s deposited after six months from the date it was first issued. So, for those who accidentally forget due to life getting in the way, there’s still usually enough time to get a cheque in the bank.

However, if it’s been a few months, it’s usually a good idea to inform the person who wrote the cheque before paying it in. That way, they can ensure there are sufficient funds in the account, reducing the risk of delays or the cheque bouncing.

Other ways to send money to someone

Cheques aren’t the only way to transfer money between bank accounts. There are now a number of different methods by which UK bank account holders can transfer funds. All of these methods take much less time than the old cheque-clearing system.

They include the following:

• Bankers’ Automated Clearing System (BACS), which takes three days
• Clearing House Automated Payments System (CHAPS), which is completed on the same day
• Faster payments, which can be completed in as little as two hours

The bottom line

It takes much less time for a cheque to clear than it used to. In fact, the cheque-clearing system has been completely modernised to match the digital banking processes used today.

If you’re interested in finding out how you can pay cheques using a banking app, speak to your bank. You will need a smartphone and access to their banking app.