Lloyds TSB has announced it will start paying instant interest on cheques from the moment customers pay them in.
The bank said its current account customers would no longer have to wait three days for a cheque to clear before earning interest on it or withdrawing the cash.
The move – which will apply to cheques up to GBP 1,000 – follows a survey by the bank which found that 90 per cent of current account holders felt angry that they didn’t earn interest on cheques as soon as they paid them in.
A similar number said they were annoyed that they were still charged overdraft interest while they waited for a cheque to clear that would put them back into the black.
Lloyds TSB estimates that the move, combined with an earlier decision to pay interest on electronic transfers during the time it takes for them to clear the system, would lead to customers receiving an average of 150 extra days of interest a year.
Last year Lloyds TSB customers deposited cheques worth GBP 32 billion into their accounts.
Terri Dial, Group Executive Director of UK retail banking, said: ‘Customers feel cheated when they pay in a cheque and don’t earn interest straight away.’
Mike Naylor, Which? banking expert, said: ‘This is a welcome move particularly for those Lloyds TSB customers who get a decent rate of credit interest. But for the rest of Lloyds’ customers who get a paltry 0.1 per cent it will make little difference.’