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?
- Cheque writing basics
- Cheque imaging
- When does the money leave/ enter your account?
- Stopping cheques and other cheque issues
- What is a banker’s draft?
- When should you use one?
- Using banker’s drafts and cheques safely
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.
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.
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.
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.
This article is provided by the Money Advice Service.
Some important information about Rest Less Money
We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.
When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.
Key things to remember when using Rest Less Money:
We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.
No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.
Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.
A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested.