Personal Finance: New interest from Lloyds

LLOYDS BANK followed the other big banks last week and agreed to pay interest on cheques after two days rather than three.

So a cheque paid into a Lloyds account on a Monday will now start earning interest on Wednesday rather than Thursday, and you can take the cash out on Thursday rather than Friday.

This brings it into line with Midland and NatWest, which changed their policies after a blast of criticism from the Labour Party. Barclays and Royal Bank of Scotland were already on the shorter clearing cycle.

Initially, Lloyds dismissed the clamour for earlier cheque clearance, pointing out that it would make someone paying in a pounds 1,000 cheque a mere ha'penny better off.

But the bank now says that it recognises consumers are knocking on the door and that it does not want to be left out in the cold.

Every day 8.5 million cheques trundle up and down Britain's roads in our crazy clearing system.

It all stems from the 1882 Bills of Exchange Act which makes the banks return cheques to the branch at which they were issued.

This costs the banks around pounds 1.6m a year, or between 45p and 50p a cheque.

But we are in the 20th century, with computers to take the drudgery out of all this money-swapping. The banks dispensed with returning cheques to customers along with monthly statements decades ago, although some customers still insist on clinging to the old habits.

The banks already have a system for electronic data exchange that bypasses the cheques. All that is needed is a change in the legislation.

It is just possible that the Queen's Speech in November will include something on this issue (known in banking circles as 'truncation' since the cheques' meanderings around the country's trunk roads are cut short at some stage of the journey).

If the system went electronic, cheques could be stored at a few regional centres, with only the mad and bad ones having to return to base for checking.

There would be no reason why the building societies could not join the banks and offer their current account customers the same speedy cheque clearing instead of the inferior service now on offer.

Then, cheque clearing could be trimmed back further, perhaps to 24 hours.

The system would be much cheaper, but it could open a battle ground between banks and canny customers as to how these savings should be shared. The banks fear their costs per cheque will rise as we usefewer cheques. But customers are no longer willing to put up with arcane systems that allow the banks to use their cash for free.

IT IS the PEP season again, and investors are nearing the deadline to invest this year's pounds 6,000 plus pounds 3,000 in a single company scheme.

Someone who had always put the maximum in their PEP would have salted away pounds 46,200.

This is a sizeable sum, and investors should be keeping a wary watch on its progress, as well as worrying where to put the next slice.

Spring pruning and replanting might be in order, which might mean a change of manager as well as a realignment of investments.

PROMOTED VIDEO
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
ebooksAn unforgettable anthology of contemporary reportage
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York