How to use banker’s drafts and cheques

Money Advice Service

Banker’s drafts and cheques are deposited in much the same way, but are issued differently. A banker’s draft is prepaid and issued by the bank. A cheque, on the other hand, is not prepaid. Both can be useful in different situations.

How can you use a cheque?

Only accept cheques from people you know and trust.

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 a bit of 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. Money typically 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 normal way would take up to six days, so doing it digitally on an app is much quicker.

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 be able to use the money four working days later – 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 used cheque imaging to pay in your check, the money will be available inside two working days, and often the next working day.

Cheques do not have an expiration date, but will 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

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 is often a charge for this.

Remember to keep the cheque stub that contains the cheque details and reference.

It is a criminal offence to hand over a cheque knowing it will bounce or with the intention of cancelling it.

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’.

Your bank will send the cheque to the bank which issued the cheque, by first class post and phone them the next day to confirm that it 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.

Don’t 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?

You usually need to give your bank 24 hours notice to prepare a banker’s draft and they will probably charge for the service.

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 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 a number of ways to transfer money to and from your bank account which can be faster and safer than using a banker’s draft.

Explore other ways to make Payments into your bank account.

Using banker’s drafts and cheques safely

  • Be careful when accepting a banker’s draft. Especially for larger sums, due to the number of instances of fake drafts being presented. For example, for the payment of cars.
  • Banker’s drafts aren’t guaranteed against fraud. If you lose one or it’s stolen, someone else could use it fraudulently. 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 straight away.
  • For larger sums, use a banker’s draft or a bank transfer. Find out about Making phone and online bank transfers.
For more information on safety, or other aspects of using cheques and banker’s drafts, go to the Cheque & Credit Clearing Company website.

This article is provided by the Money Advice Service.

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