Interest payments on cheques will be delayed

NORTHERN ROCK is the latest building society to cut the amount of interest it pays its savers by lengthening the time before it will pay interest on cheques.

Until now it has started paying interest on cheques on the day after they were deposited. From 10 May the society - which has attracted hundreds of new investors in the past year or so with its high-paying postal accounts - will not pay interest until cheques have cleared.

The society will pay interest after four days on cheques drawn from English banks and five days for cheques drawn on Scottish banks. At branches in Scotland it will require four working days for Scottish bank cheques and five for cheques drawn on English banks.

The banking industry's cheque clearing system allows an extra day for cross-border cheque clearance because it can take longer than the standard four days for cheques to clear between branches at opposite ends of the country. Not all banks and building societies choose to make the distinction, however, when deciding when to credit interest.