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Cheque guarantee cards to be scrapped

Guaranteed payment scheme to end 30 June 2011

Banks and building societies will stop guaranteeing cheques after 30 June 2011. The Payments Council (formerly APACS) announced that the change had been agreed by 24 institutions, including Abbey, Barclays, Halifax Bank of Scotland, HSBC, Lloyds, NatWest and Royal Bank of Scotland.


You can incur a penalty for HMRC mistakes

The move comes against a background of declining cheque use. Volumes fell by 33% last year and by 70% over the past five years. Of 1.4m cheque transactions recorded last year, only 7% were supported by a cheque guarantee card. The low level is explained by the decision of most major retailers to stop accepting cheques at all. 

Cheque guarantee cards were first introduced in the 1960s, before debit and credit cards became widespread. They have recently been identified as a source of fraud, with £43m losses being ascribed to ‘cheque guarantee card misuse’. Banks also find the system costly to administer. The spread of ‘plastic money’ means that there is a ready alternative to cheques for most transactions- as well as cash, where cards are not suitable.   

Cheques will continue to be used after the 2011 deadline, but they will no longer be guaranteed.  

Read the Which? advice guide for more information on your rights when paying by credit and debit card. To find the best credit card for you, check out our Best Buy credit cards.   

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