What are cheques?

Cheques are written orders from account holders instructing their banks to pay specified sums of money to named beneficiaries. They are not legal tender but are legal documents and their use is governed by the Bills of Exchange Act 1882, and the Cheques Acts of 1957 and 1992.

What are Bankers' Drafts?

Bankers' drafts are cheques drawn directly on the account of a bank rather than the account of a customer. The comfort they provide is that it is highly unlikely they would be returned unpaid due to lack of funds. However it is important to note that there is no guarantee against fraudulent use for example, they may be lost or stolen and then used fraudulently.

The Clearing Cycle

There is often confusion about how the clearing system works and the time it takes for a cheque to clear. In fact, it operates within a three-day period. In November 2007 the 2-4-6 changes to cheque clearing came into force, giving customers increased clarity and certainty.

The clearing does not operate on Saturdays, Sundays and Bank Holidays — as settlement across Bank of England accounts can only take place Monday to Friday. A full explanation of the cheque clearing cycle can be found on the Cheque and Credit Clearing Company's website.