Lloyds TSB makes cheques interesting

Starting today, Lloyds TSB will pay interest on cheques from the moment they are banked - rather than wait three days for them to clear.

Customers of Lloyds TSB's personal current account will benefit from the service - the first of its kind in the UK - they will also gain instant access to the money paid in.

"Customers feel cheated when they pay in a cheque and don't earn interest straight away. From today, our customers stand to earn over 150 days' more interest," said Lloyds TSB director Terri Dial.

After this announcement, all personal current account customers at Lloyds TSB will receive immediate interest on cheques up to £1,000.

This also means that people in the red will have their overdraft reduced instantly, meaning they are charged interest on less money.

And the move looks set to gain favour among UK residents customers.

A poll by Lloyds TSB found that nine current account customers in ten are angry that they have to wait until a cheque clears to earn interest on the money, while almost as many are annoyed that overdrafts still charge interest until cheques clear.

Moves are already underway to ensure that standing orders, telephone, and internet bank payments will move between accounts on the same day, these currently take three days to move between accounts.

However, in the next year and a half changes will come into force which mean payments made before noon will reach their destination on the same day.

To compare or switch current accounts, click here.