... Cheques

How cheques work

Clear funds are the funds actually available for immediate use in an account.

When a payee presents a cheque to the bank, it has to be cleared before the funds are available to the account. Clearing at this level means the time it takes for:

• the payee's bank to check that the person who wrote the cheque has enough money in their account to cover the amount on the cheque; and
• the funds in the drawer's account are clear.

If the drawer has enough clear funds, the money is transferred into the payee's account and is available for use. This takes a standard time of three working days.

If there are not enough clear funds in the drawer's account, the cheque will be dishonoured. This is often referred to as the cheque bouncing.

Some queries about Overdrawn fees or Automatic Teller Machines stating Insufficient funds, can be traced back to a client thinking the funds from a cheque are ready to use as soon as it is deposited in the bank.

A cheque account usually earns no interest.