All cheques written and received by you go through the clearing cycle, a system used by the main British Banks to transfer money between accounts.
The clearing cycle used by the main banks changed in November 2007 and is now often referred to as the ‘2-4-6’ process (or ‘2-6-6’ for deposit accounts) as it sets a maximum time limit of two, four or six working days for each stage of the process after paying in a cheque.
This is how it works –
If you pay a cheque in on a Monday morning:
This does mean that a cheque can still be taken from your account for up to six days after you pay it in even if you have already spent it.
For our purposes, a working day lasts from 9.00am to 5.00pm, Monday to Friday, excluding Bank Holidays. Cheques or cash paid in after 5.00pm (sometimes after 3.30pm) won’t be processed until the next working day.
If you have any further questions about the clearing cycle, please ask your relationship manager or your local branch.
More information on this initiative, and how it applies across the UK Banking Industry, is available at www.chequeandcredit.co.uk/246
The clearing cycle has three stages and takes up to four working days to complete. For our purposes, a working day lasts from 9.00am to 5.00pm, Monday to Friday, excluding Bank Holidays. Cheques or cash paid in after 5.00pm (sometimes after 3.30pm) won’t be processed until the next working day.
Step 1 | You pay the cheque in. We credit your account that day, but the money can’t be used yet. |
Step 2 | We “apply the value of the cheque to your account”. This means that even though you can't use the money, it reduces any interest you may be paying on an overdraft, similarly, if the cheque was paid into an interest earning account, it would start to earn interest for you. |
Step 3 | We treat the cheque as cleared and you can take the money out. However, even though we have credited your account, the other bank could still reject the cheque. In that case, we’ll debit your account and write to let you know why. |
So, if you pay in a non-Lloyds TSB cheque into your account before 5.00pm on Monday, you will be earning interest by Wednesday and by Friday you will be able to take the cash out.
If someone pays in one of your cheques at your own branch by 5.00pm, the money will leave your account that day. If they pay in the cheque elsewhere, your account won't be debited until the third working day.
If you cash a cheque at any Lloyds TSB branch before 5.00pm the money will leave your account that day.
Most automated payments are processed through the BACS system. Lloyds TSB follows the industry standard processing cycle of three working days as follows:
Day 1 | Payment details are sent overnight to BACS for processing. |
Day 2 | Payment details are sent to the receiving banks for processing in their systems. |
Day 3 | The value of the payments is credited to the beneficiaries’ accounts and the sending account is debited. This is known as same day debiting and crediting. |
Within Lloyds TSB the exceptions to the above processing cycle are payments made via Internet Banking, Telephone Banking and Standing Orders. These systems debit on day 1 and credit on day 3. However, as a Lloyds TSB customer, you will not lose the “value” of the money for these two days, as we adjust your interest calculation as though the money were in your account until day 3. This means that if your account was in credit and receiving interest, although the money would have been debited on day 1, we continue to pay interest until day 3.
For those customers who make payments by Internet or Telephone banking, Day 1 of the processing cycle starts the day after payment is requested. This is because these systems operate outside of normal working hours, and therefore the transactions are processed overnight.
