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.

Start your day with The Independent, sign up for daily news emails
News
Nick Clegg on the campaign trail in Glasgow on Wednesday; he says education is his top priority
peopleNick Clegg remains optimistic despite dismal Lib Dem poll ratings
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?