Why do cheques take 7 days to clear

In the past, checks were physically delivered across the country. After the attacks on Sept. Still, funds becoming available before a few days pass is possible. Governments have taken this initiative seriously. The United Kingdom passed legislation cutting the time of check clearing to two days by using photographs of checks and sending images electronically, according to a Telegraph article. Check clearing in the Philippines will be reduced to one day beginning in January , its central bank stated in July.

For people living paycheck to paycheck, waiting for funds to be available can have severe consequences. Banks offer overdraft protection , which depends on their credit worthiness, but that could incur interest and additional costs if not balanced appropriately.

Measure content performance. Develop and improve products. List of Partners vendors. Check use is becoming less frequent, especially since more people are adopting electronic banking. But there are still people who like to use these slips of paper to conduct transactions.

For example, maybe you're a landlord whose tenant writes out a check for the rent each month. Or perhaps your dear old aunt still sends you a check for your birthday every year.

Whatever the reason, you should be aware that you may not have access to the full amount right away when you deposit it into your bank account—even if your balance indicates otherwise. If you try to use the funds right away, you may run into problems—even bouncing payments and getting charged by your bank. So it pays to understand the basics of checks and hold times. Read on to find out more about how long it takes for checks to clear and how you can avoid costly fees that may result from any misunderstandings.

When you open up a bank account, financial institutions always outline their policies about deposits, including hold times for check deposits. Banks place these holds on checks in order to ensure the funds are available in the payer's account before giving you access to the cash.

By doing this, they help you avoid incurring any charges—especially if you use the funds right away. It usually takes about two business days for a deposited check to clear, but it can take a little longer—about five business days—for the bank to receive the funds.

How long it takes a check to clear depends on the amount of the check, your relationship with the bank, and the standing of the payer's account. Wait a few days before contacting your bank about holds on deposited checks. Of course, the hold time often depends on the nature of the check. A bank may choose to hold a check longer if it's an unusual deposit if you've never deposited a check from that payer before, if the check is for a large amount, or if the check is from an international bank.

The latter requires a much longer hold time because it can't be easily verified. Hold times for these checks depend on your institution, so you should check with someone about the policies. Check hold policies vary between banks, so check with your institution about how long you have to wait to access the funds. That slows things down. Then the check has to make a round trip between your bank and the bank that pays it. All told, the circuit can take around six days. Feddis: More and more there is an electronic aspect to check processing, but unlike credit cards, it is not, nor will it ever be, entirely electronic.

Feddis: Many banks will provide quicker availability for good customers. So people should ask for sooner availability if they need it. Our mission at Marketplace is to raise the economic intelligence of the country. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting. Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service.

Skip to content. If you don't like the policy, ask your banker if there are other options. If the answer is no, consider moving your money. Be aware: Not all checks are created equal. The hold time can vary depending on the size of the check, who wrote it and where it originated for example, banks often put longer holds on out-of-state or out-of-country checks.

When you open an account, tell the bank how you plan to use it. The bank's representative can help you select the right kind of account. Avoid surprises: Review the documents your bank sends you. In addition to your statements, review anything the bank sends regarding changes to your account. If you don't understand it, get someone at the bank to explain it.

Consumers Union has compiled a [ chart ] comparing today's rules regarding how long banks can make consumers wait until deposited funds clear their accounts and those proposed under the Consumer Checking Account Fairness Act.