How does cheque clearing work?

We investigate the process behind clearing a cheque to find out exactly how it works - and why in a world of instant technology it can still take so long.
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Paying by cheque

Paying by cheque isn’t as popular as it once was. After all, how long does it take a cheque to clear, in comparison to doing a bank transfer? Much longer. More on this below.

You can still pay by cheque in some places, but cheques are rarely accepted as payment on the high street these days. 

Cheques are still used as a method of payment, whether in business transfers, a birthday present from your gran, or for other reasons. But they’re becoming less attractive due to the speed and ease of electronic transfers and instant payments.

How long does a cheque take to clear?

If you’ve ever banked a cheque and then sat wondering ‘how long does a cheque take to clear?’ you won’t be alone. Many people don’t know how the process works, so here’s a day-by-day summary.

Paying by cheque isn’t the quickest form of payment in this day and age. In fact, in some cases, once you’ve banked a cheque, you can’t access the funds until several days later.

This is the traditional cheque-clearing process:

Day 1

  • You bank the cheque. The details are registered with both banks – yours, and the bank the funds are coming from

  • You can usually see the funds payable to you on your statement at this point

  • All cheques are rounded up at the end of each working day and sent to a clearing centre.

Day 2

  • The cheque arrives at the clearing centre to be sorted

  • The sort code, account number, serial number, and amount are taken from the cheque

  • These details are sent electronically to the bank that the cheque’s from

  • It goes to an exchange centre. The bank that the money’s coming from picks it up from here.

Day 3

  • Most banks begin to pay interest on your paid-in funds within 2 working days

  • The transaction shows on the statement of the person making the payment

  • It could still bounce, or have a technical error that would require it to be returned at this stage.

Day 4

  • You can withdraw the funds

  • The cheque could still bounce up until the sixth day. If this happened you’d have to pay the money back.

If you’ve ever asked someone ‘how long does a cheque take to clear?’ they might have mentioned the 2-4-6 system. This is a clearing system brought in by the Cheque and Credit Clearing Company which carries out cheque clearing. 2-4-6 indicates:

  • 2 days until the money’s earning interest

  • 4 days until you can withdraw

  • 6 days until you can be sure that the cheque funds have been applied to your account.

Find out more from the Cheque and Credit Card Clearing Company.

How long is a cheque valid for?

We’ve all done it – forgotten to cash a cheque and then panicked. But there’s no need to panic. Cheques don’t have expiry dates. As long as one party still owes the other party the money that the cheque will transfer, the cheque’s still valid.

Is there a quicker way?

Cheques can clear much quicker than they used to. The main reason that cheque clearing has taken so long traditionally is that cheques are physical pieces of paper.

But many UK banks now use cheque imaging which speeds up the process a lot. It means that the need to move pieces of paper around has been removed.

It also means that customers can – in many cases – bank cheques by uploading a photo of the cheque via their bank’s app.

Cheques can now clear as quickly as by 23:59 the day after they were banked. It sometimes clears even quicker than this, although it’ll take longer on Bank Holidays.

How to cash a cheque

If you’re unsure how to cash a cheque, you’ll be pleased to hear you have options.

When you’re given a cheque as payment you may have to visit your local bank to pay it in in the traditional way. But, depending on how tech-savvy you are and who you bank with, you might not need to make the trip.

With the introduction of new technology, many people can pay in cheques using their smart device. They can just take a photo of the cheque and upload it to an app.

A lot of banks now also have paying-in machines that electronically read the data of your cheque and hold it for processing using cheque imaging. So, even if you do go to your bank to pay it in, it should clear more quickly with this option.

If you’re unsure how to write a cheque, here’s a guide.

How to cash a cheque without a bank account

You don’t have to have a bank account to cash a cheque. When you youse cheque cashing service, the cheque can be paid out in cash, so this removes the need for a bank account.

Most of these services will charge a fee. Some pay charge a flat fee if it's below a certain amount, or a given percentage of the amount cashed if it is above a certain threshold.

Is there an alternative to cheques?

Yes. The other option is to move money using a bank transfer. You can move money between people and companies this way. 

Bank transfers can be set up on a mobile phone or computer using online banking or Paym. It’s simple to do. You just need the recipient's mobile number to send money through Paym. Or you need the payee's name, sort code and account number to use online banking.

Payments usually arrive in less than 2 hours and can be spent immediately. You can compare bank accounts with online banking to find one with all the features you need.

Can you transfer money abroad?

Yes, instead of posting a cheque you could use an international money transfer. This lets you send money in your bank account to a bank account held in another country, either in your own name or someone else's.

New bank accounts are offered all the time, so compare all of the best options to make sure you get the right one for you.