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.


Can you still pay by cheque?

Yes, you can still pay by cheque in some places. However, they are rarely accepted as payment on the high street and could soon be a thing of the past.

With the introduction of electronic transfers and instant payments the simple piece of paper that takes days to clear is becoming less attractive.

For now though at least cheques are still used as a method of payment, whether in business transfers, a birthday present from your gran, or for other reasons.

Is there a quicker way?

Yes, you can receive bank transfers directly to your current account from other people or companies. You can also send payments this way, and they are easy to set up on a mobile phone or computer using online banking or Paym.

Payments usually arrive in less than two 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.

How do you pay in a cheque?

When you are given a cheque as payment you may have to visit your local bank to pay it in.

With the introduction of new technology everyone should soon be able to pay in a cheque from a smart device.

Many banks now have paying-in machines that electronically read the data of your cheque and hold it for processing. Otherwise, the more old-fashioned visit to the bank teller is still an option.

You can pay a cheque into some banks by simply taking a photo of it and uploading it to an app.

What happens to the cheque?

Day one

  • The cheque details are registered with both your bank and the bank it has come from

  • You can usually see the funds payable to you as an entry on your statement

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

Day two

  • The cheque arrives at the clearing centre and waits 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 on which the cheque is from

  • It goes to an exchange centre where the bank the money is coming from picks it up

Day three

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

  • The money taken from the account that is paying shows as an entry on a statement

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

Day four

  • You can withdraw the funds

  • The cheque could still bounce up until the 6th day

What is the 2-4-6 system?

The 2-4-6 is a clearing system brought in by the Cheque and Credit Clearing Company who carry out cheque clearing.

2-4-6 indicates the two days until the money is earning interest, the 4 days until you can withdraw, and the 6 days until you can be sure that the cheque funds have been applied to your account.

You can find out more from the Cheque and Credit Card Clearing Company

Why does it take so long?

The main reason that cheque clearing still takes up to 6 days upon first paying in the money is that cheques are physical pieces of paper.

Unlike money that can be moved electronically, cheques must be actually handled - picked up, delivered, received, and manually checked.

Some say that cheques take so long to clear because banks earn interest while cheques hang in limbo. But the 2-4-6 system stops this a little, by guaranteeing you start earning interest 2 days after you pay a cheque in.

If you want to send or receive money quicker, register your bank account with Paym or use online banking instead.

Compare current accounts that let you send and receive money online

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