Cheques, although in declining use, still generate complaints, usually about how long it takes to clear funds. A cheque, once deposited, can take three to five working days to clear, and even longer for overseas cheques. If you deposit a cheque into your account, check with your bank that the money has cleared before you consider it yours.

How cheques are cleared

When you deposit a cheque issued in New Zealand, your bank will credit the cheque amount to your account. This doesn’t mean the money is immediately available for use, so you won’t be able to withdraw it or transfer it to another account straightaway.

On the same day you deposit your cheque, your bank will send the cheque details electronically to the issuing bank, which has until the end of the next working day to decide whether to pay or dishonour the cheque.

If the cheque is honoured, you can access the funds by the end of the next working day. The issuing bank can’t reverse or dishonour the payment after this time.

If the cheque is dishonoured, the amount credited to your account will be reversed. This is why it is important not to consider the funds yours until they have been cleared. Reasons for dishonouring a cheque include that it is stolen or there is not enough money in the account to pay the cheque.

The clearance process for foreign cheques is different and takes longer than three working days.

 

Check with your bank that the money from a cheque deposit has cleared before you consider it yours.

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