Clearing cheques

Can any member who works for a bank explain why it is that banks take five working days to clear a cheque? No doubt, it is profitable for them, since they can presumably clear the cheque electronically in milliseconds, and then earn interest on the money they have borrowed from us without our permission for five days. More to the point, why does the goverment permit this robbery? I suspect that, if it were in the banks' financial interest to do so, they could easily clear the cheque the same day.

Rocker

yep, it would only be because they are making money off us

Because they can get away with it, I suppose. The 5-working days thing was perhaps justifiable when they were using parchments and quills, but not excusable when approval to withdraw cash from an ATM can be obtained on the other side of the globe in a matter of seconds.

Did you know that they even do it with bank cheques. :mad:

Just further proof - if any were needed - that the banks - ALL the banks - are bastards. And unfortunately, even the credit unions have started doing it too.

I think it was Whitlam who deregulated banks - stand to be corrected on that. Wonder how big a kick-back he got?

I reckon if John Winston wants to shoe-in the next election, regulate the buggers again. He'd win by a landslide.

Whilst I was working in a bank (left 1972) the procedure of clearing cheques was as follows:

After depositing the cheque it was sent to the state head office where it was exchanged for value with the bank it was drawn on. That bank then forwarded the cheque to the branch concerned.

Upon receipt at the branch it was checked for correctness and to see if there was money in the account to meet it. The branch had until 3.00pm the next day to do this when it either had to clear the cheque or dishonour it.

If the cheque was dishonoured the bank sent the cheque back to the bank where it was deposited by mail. This process took 5 working days and whilst the computers transfer the funds immediately the cheque still has to physically presented to the branch for payment.

Also up to the time for dishonour being 3.00pm the day after receipt by the branch the customer could stop payment of the cheque by issuing written instructions to his branch.

This also applies to any Bank Cheque you may have purchased, you can request that the payment be stopped, although you may have to give the Bank a suitable idemnity. I know of at least 10 cases where one of our customer's stopped payment of bank cheques that they had purchased.

Of course that was a long time ago but I doubt if much has changed as they still have to sent the cheques to the branch using aussie post.

Peter.

I am no defender of the banks, however the money does sit in your account whilst waiting to be cleared and will earn interest if in an interest bearing account. If an overdraft same deal, you just can't draw it out of your account for that period until the bank is satisfied the cheque is fair dinkum and not made of rubber.

John.

I thought it was only 3 days to clear a cheque. I think it went from 5 to 3 a few years ago didn't it?:confused:

I checked the RBA website and found this.

http://www.rba.gov.au/MediaReleases/1999/mr_99_04.html

A 3 day clearing cycle was introduced in 1999.

I bank with The Commonwealth Bank and they certainly only take 3 days to clear any cheques I deposit. As per the example in the media release I've linked to above, if I deposit a cheque on a Monday then if the cheque clears I can draw on the funds on the following Wednesday.

Here in the States we have 3-day check clearing laws as well. But . . . if you are a known customer of the bank and have not had any problems, they commonly allow you to draw upon the funds immediately and assume the check (cheque) will clear properly. Of course, stiff 'em once and bye-bye immediate draw. :o

The fact is, banks here are using electronic funds transfers batch processed overnight and only images of the physical checks are transmitted. The actual check is scanned and destroyed when it clears. If you want your checks back at the statement period you must pay extra to have them stored.

The down side to this quick turnaround is that when I was a young'un and strapped I could write a check knowing it wouldn't clear for several days (which gave me time to get the money in my account somehow).:D

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Originally Posted by johnc

I am no defender of the banks, however the money does sit in your account whilst waiting to be cleared and will earn interest if in an interest bearing account. If an overdraft same deal, you just can't draw it out of your account for that period until the bank is satisfied the cheque is fair dinkum and not made of rubber.

John.

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John,

I bank online, and I did not see any entry for the check that I had credited to the account in my online statement, until the check was actually cleared some days later (presumably 3, not 5, as I had thought). I am sceptical whether the money was in fact earning interest meanwhile at the princely rate of 0.05% per annum that the bank pays on this account.

Rocker

I have accs with Suncorp and ANZ, the former take 3 days to clear and the latter thieving bastards take 5.
They also screw me for every fee they can get their grubby filthy little mits on.
I find them impossible to deal with and they never, ever respond to any communication.
If I didn't get paid direct to this acc I wouldn't even give them the steam off my s###.

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Originally Posted by Bob Childress

Here in the States ... only images of the physical checks are transmitted

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When I was banking in the US, I used to get monthly photocopies of all the cheques I'd written in that month. A very useful -- and free -- service. Unlike here in Oz, you don't have to pay an American bank to keep your money for you.

Perhaps genuine competition amongst banks in Australia would force them to offer actual services like reduced clearing times, and monthly photocopies of cheques.

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Originally Posted by zenwood

When I was banking in the US, I used to get monthly photocopies of all the cheques I'd written in that month. A very useful -- and free -- service. Unlike here in Oz, you don't have to pay an American bank to keep your money for you.

Perhaps genuine competition amongst banks in Australia would force them to offer actual services like reduced clearing times, and monthly photocopies of cheques.

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Maybe?
But once the new competion see what suckers we all are, they would do excatly the same as the rest of the blood suckers.

Al :mad:

I'm sure if you ever had someone cash a fake cheque in your name, you would be asking why cashing a cheque is so easy ;)

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that was a long time ago but I doubt if much has changed

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Peter, I don't think the process has changed that much. They still have a physical piece of paper to deal with and technically it has to be sighted by someone at the issuing bank before it can be cleared. If they started clearing cheques unsighted, there would be hell to pay when they made a mistake.

I remember having a conversation with a senior person at the bank once. He said that people get upset about all kinds of things when mistakes are made: with their health, their car, their kid's education - but heaven forbid you should ever make a mistake with their money.