Interest on Uncleared Chqs

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  StewBalls on 12/04/2014 - 21:52

  …you insert the chq a certain way and the autobank reads it and scans it.

  Yup, it uses those fancy 'futuristic' looking numbers printed along the bottom, it's called MICR encoding & it's been around since the '50s.

  if I wrote out a cheque for $50,000,000 and put in it my account Friday night, I would earn interest for Saturday and Sunday…

  No, you wouldn't, they can easily backdate the transaction to that of deposit rather than clearance, and then you will still get hit with an inward dishonour fee on one account & an outward one on the other with nil interest to offset…you'd be well behind! ;)

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  ilostnemo on 12/04/2014 - 23:05

  I don't think it reads the micr line, and no evidence is there that it does, it worked out the amount from the cheque which isn't included on the micr line.

  When I worked in the bank and did outward dishonours, ie cba chqs deposited into another banks account, we did the following.

  We credited the account the chq amount and then sent the chq to the bank and branch who accepted the deposit. Included with the chq was a debit (drawing voucher on that bank.

  We balance our journals with a debit and a credit.

  It would take a day for the bank to notice the account was overdrawn , and a day for the other bank to get the notice, hence why we have clearance days.

  The entries were never backdated.

  How it would work, unless they have done a complete overhaul, is the following.

  Friday my account is credited, and chq sits in ATM till Monday.
  Monday night chq is sent to the processing centre and the cheque is debited from who ever account it is.
  Tuesday account is overdrawn and then knocked back so worst case scenario my account would be debited Tuesday.

  • 

    StewBalls on 13/04/2014 - 08:10

    +1

    ATMs do use MICR to improve read rates as well as OCR as part of redundant validity checks. Seriously, would you trust OCR alone???

    I also used to work in a bank…I can assure you that they can & do backdate transactions all of the time…of course they'll backdate for a $50m fraudulent cheque. Now, I'm not sure if you remember what the current account examiner does, but they get a report every morning including data from the clearing house telling them which idiots have drawn cheques (debits) against insufficient (credit) balances…your window of (I'm loathe to use the word 'opportunity') whatever is much shorter than you think.

    But since you reckon you know all of the systems, just do it then & report back to tell us how much profit you made. Best of luck to you, but I suspect that you're gonna be in for a rude shock…including the possibility of fraud charges for knowingly drawing a stupidly large cheque which you know can never be honoured.

    • 

      ilostnemo on 13/04/2014 - 10:19

      Ok, I just checked, my account statement when some tosser gave me a bad cheque.

      15 Nov Returned Cheque
      Value Date: 13/11/2012 484.20 -

      On the 13/11 I deposited the chq. On the 15th it was reversed.

      I didn't imply I know all the systems, what I'm saying is that I've seen a change, in how they do things.

      • 

        StewBalls on 14/04/2014 - 17:52

        what I'm saying is that I've seen a change, in how they do things.

        I haven't seen any major change in how they process cheques (from a customer's perspective)…what you proposed would have always been a dumb idea.

      • 

        ilostnemo on 15/04/2014 - 14:52

        WA must be well behind, it was only 2 months ago, I was putting my cheques in an envelope, then inserting the envelope into the autobank, and the next day they would show up in my account.

        I deposited a chq into my account, yesterday and folded the micr line over, unfortunately it spat the dummy.

        my idea was a given scenario, I'll take your opinion on board, and quickly dismiss it.

      • 

        ilostnemo on 15/04/2014 - 15:18

        Ok, because I'm a curious person I spoke to the bank.

        The autobanks are slowly being replaced, to these new fandangle machines.

        The cheques are automatically deposited to the account on the Friday, and they are sent to the processing centre on the Monday.

        The staff member informed me that the account would be debited Monday night.

        So, in affect, you can earn interest on an unprocessed chq.

        Another scenario is you have $10,000 in your chq account, you write a cheque out for $10,000 on Friday and deposit it, back onto your chq account. Your account will be credited Friday to $20,000 and on Monday night the chq will come of your balance. leaving $10,000 in it.

        I know the interest isn't much on chq accounts, just interesting the bank would do this.

      • 

        StewBalls on 16/04/2014 - 06:58

        +2

        Seriously mate, before this thread I gave you a lot more credit for having some commonsense. What was it exactly that you used to do in the bank??? A lot of this is like, Banking 101…

        Ok, because I'm a curious person I spoke to the bank.

        Please tell me that you told them your entire genius plan, I would have loved to be a fly on the wall for that conversation. They're probably still laughing. What you have proposed is cheque fraud, pure & simple.

        my idea was a given scenario, I'll take your opinion on board, and quickly dismiss it.

        So given that my advice was to NOT commit cheque fraud, you really are now going to write yourself out a fraudulent $50m cheque & deposit it…wow, just WOW!!!

        So, in affect, you can earn interest on an unprocessed chq.

        You can earn interest on uncleared funds…so long as they are later cleared. You do not receive the interest daily either. You cannot earn interest on fraudulent funds which are immediately dishonoured; the banks are not stupid, they can & do backdate value transactions to avoid this (FFS, the data entry to accomplish this was once part of my own job); in short you have not found some new alchemy for making money from nothing.

        The autobanks are slowly being replaced, to these new fandangle machines.
        The cheques are automatically deposited to the account on the Friday, and they are sent to the processing centre on the Monday.

        So like I said, no real change to the actual processing of a cheque as a financial instrument; it clearly still needs a human hand to be proofed, batched & sent off to a clearance house at the first opportunity. No different to previous ATM or nightsafe deposits.

        Another scenario is…

        No, that's essentially the same scenario with different figures…also cheque fraud, and just as stupid. Knowingly writing large cheques on insufficient funds is dumb enough, but being stupid enough to write them out payable to yourself is just playing on a whole new level!!!

        Like I said 3 days ago, just go ahead & do it if you think you've outwitted the banks & discovered a fiscal perpetual motion machine, let us all know how it works out for you.

      • 

        ilostnemo on 16/04/2014 - 12:39

        So my question is, if I wrote out a cheque.

        IF

        It is not cheque fraud, to write out a cheque to yourself, I think you've watched Catch me if you can to many times.

        Ring up a bank, and gain some knowledge. When businesses pay there employees cash (on the books, before you ring up the ATO) the business often replaces the cash with a chq from the business, so the wages go through the account. It's called record keeping.

        I will type this slowly, in the past when I deposited a chq on Friday Night through the autobank it didn't show up in my account till Monday, then I would earn interest on it. Now it shows up on Friday.

        I'm glad the lady I spoke to, confirmed what I said.

        The same scenario is when a business pays for petty cash, they make out a cheque and take the money from the till.

        If you actually took the time, to read my above post, you would of seen, that the $10,000 chq would off cleared, as there were sufficient funds.

        The change is, they put the chq into your account on the same day, they never used to do this.

        Can you please show me, where it is written, that banking your own chq is fraud.

        Try and think outside the square and before you write your reply in Bold, italics, don't forget to show me where it is written, that banking your own chq is fraud.

      • 

        ilostnemo on 16/04/2014 - 12:47

        1/4 Account Creditted $10,000.
        4/4 Account Debitted $10,000.

        Interest is earnt on the 2nd and 3rd

        In short that is making money from nothing.

        Beforehand it was 4/4 Account Creditted $10,000.00
        4/4 Account Debitted $10,000,00

        Bank would not pay any interest.

        The lady said the bank, would of budgeted this into there books, as they believe the new atm will reduce their staffing needs.

        My local branch, has gone from 8 staff to 3, and they have these new machines, where the tellers don't even count the money, it's all inputted to the computer and the machine counts it 8 times. They say they always balance every night as well.

        I deposited a chq last Friday and last Saturday, they weren't big cheques but they showed up in my balance on the day, so by earning interest on those chqs from Friday and Saturday, I would have to be in front, compared to the bank crediting my account for both the cheques on the Monday.

        wow just WOW

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  Tnetennba on 13/04/2014 - 01:51

  I wouldn't go writing any $50,000,000 cheques without having $50,000,000. I'm pretty sure the bank wouldn't just let you keep interest on it, lol.

  There is also probably some sort of limit, I would assume, on the auto cheque thing? I wouldn't think the bank system would allow $50 million to be deposited automatically into a bank account just by reading a cheque at an ATM.

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  tim_geo on 13/04/2014 - 02:37

  You would think if the bank can auto clear cheques into the available balance, they would also program in auto removal of the dishonoured cheque including any interest.

  The removal of interest needs not be backdated right? Say Friday was 29/3 and on Monday 1/4 your interest is paid, if on Tuesday the cheque is reversed, they could reverse the interest on Tuesday 2/4 too?
  Also when cheques were cleared the manual way there would be no interest anyway, hence no need to remove the interest when going the old way.