Only 5% of retail spending is still paid by cheque, compared with over 60% by debit or credit card. But there are still some rules you need to know about.
When was the last time your wrote a cheque - or received one? No, I can't remember either. The use of cheques has been declining rapidly since 1990 and according to the payment clearing service, APACs, by 2015 personal cheques will account for only 2.9% of all non-cash payments made by individuals.
It's hardly surprising considering the convenience of debit and credit cards and the advent of online banking which make transfers so much easier. Nevertheless, they are still in use and it's as well to be aware of the possible pitfalls of issuing and accepting them.
Most people aren't aware that a cheque remains legally valid for six years. And, no that's not a typo - it really is six years. Although it is common practice by banks to reject cheques that are more than six months old, this is in fact at their discretion. Don't assume that they will automatically reject as cheque as being 'out-of-date' so if you've issued a cheque that hasn't yet been cashed, be aware that it could still be.
The only certain way to cancel an out-of-date cheque is to ask your bank to put a stop on it although cheques backed by a guarantee card can never be stopped.
Amazingly, even after you've paid a cheque into your account, the funds have cleared and the money appears to be available to you, your bank can ask for the return of the money if the cheque turns out to be stolen or counterfeit. And this can be at any time after it has been paid! Thankfully, the rules will be changing towards the end of the year when banks will guarantee that they will not take the money back from your account after it has been in there for six days.
The new rules will also mean that every bank will pay you interest on credited cheques two days after you've paid it in and you'll be allowed access to the money four days afterwards. Unfortunately, they're 'banking days' so weekends and Bank Holidays don't count!
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