How to use cheques and banker’s drafts

A cheque is an official piece of paper from your bank that you can use to pay with, a bit like an IOU.  

Once the person or company pays in your cheque, their bank asks your bank to transfer over the money. This process usually takes one or two working days. 

If you don’t have enough money in your account, the cheque will return unpaid – known as a bounced cheque. If this happens, you’ll need to arrange an alternative way to pay.

A banker’s draft works in the same way as a cheque, but it can’t bounce. The bank writes out the cheque for you in a branch and takes the funds from your account at the same time – so it’s like a prepaid cheque. 

Banks normally charge a fee for this service and often require 24 hours’ notice.

Since a cheque or banker’s draft is a piece of paper, it could be lost, stolen or tampered with. These alternatives are made electronically, and the money is usually sent immediately or on the same day: 

• Bank transfer – usually available via mobile or online banking, in branch and over the phone.
  
• Debit card or credit card payment – if card payments are accepted, these come with added spending protection.  
  

If cheque is an accepted form of payment, to tell your bank you’re happy to make the payment, you write down: 

• the name of the person or company you’re paying - along with any reference number 
  
• how much you want to pay in words and numbers  
  
• today’s date, and
  
• your signature.
  

Then, draw a line through any blank spaces to prevent anyone from adding any extra numbers or names.  

Make sure you have enough money in your account to cover the value of the cheque until the person has paid it in and the money has been deducted. If you don’t, some banks might charge you a fee for the bounced payment. 

If a cheque is lost, stolen or you made a mistake – for example, you wrote the wrong name – ask your bank to cancel it. Most banks don’t charge for this.

You can normally request this via online banking, over the phone or in branch. You’ll often need:

• cheque number – found on the stub in your cheque book
• name of the person you’re paying
• amount, and
• date on the cheque.   

You can usually pay in a cheque:

• using mobile banking – you take and upload a photo of the cheque 
  
• at a bank branch
  
• at a Post Office, or 
• by post.  
  

You might be asked to complete a paying in slip or write your account details on the back of the cheque. This is so the bank knows which account to pay it into.  

Before paying in, make sure the cheque is in date – banks normally reject cheques older than six months or with a future date. 

Provided you pay the cheque in before the bank’s cut-off time (often around 3pm), the money should be available by the end of the next working day.  

For example, if you paid in a cheque on Friday at 10am, you’d usually be able to spend the money by midnight on Monday (Tuesday if it’s a bank holiday). If paid in after the bank’s cut-off, it would clear by midnight on Tuesday (Wednesday if Monday was a bank holiday).    

Cheques paid in at a Post Office usually take an extra working day. 

Since there’s a risk the cheque you’re given will bounce, make sure you can contact the other person to arrange a different way to get paid. 

If you’re selling goods or services, it’s better to use an instant payment method such as bank transfer.

If something has gone wrong with a cheque or banker’s draft, follow these steps;

1. Ask your bank’s customer services to put things right – if you can’t agree on a resolution, then   
2. Make a formal complaint – they have eight weeks to investigate and give a final response. If you still don’t agree, or the timeframe has passed, you can   
3. Take your complaint to the free Financial Ombudsman Service – you’ll get an independent decision on whether your bank’s response was fair or if they need to do more.    

For more information, see our guide Claiming compensation if you’ve been mis-sold.