Revealed: The plot to write off cheques

Millions still depend on them. But, as this investigation reveals, ruthless cost-cutting banks and businesses are sneakily killing off the cheque book – and it’s costing YOU thousands

BAnKS and businesses are trying to push out cheques by the back door by introducing a host of charges and obstacles, a Money Mail investigation has found.

Many utility and insurance firms are among the companies that no longer accept them.

It means people who still rely on cheques, such as the elderly, are being forced to forgo the cheapest deals.

research compiled for Money Mail reveals that only around 4 pc of car insurance policies and 24 pc of home insurance policies can now be paid by cheque.

Just 62 out of 260 home insurance policies and eight out of 211 car cover deals accept the form of payment, according to the research by the financial information firm Defaqto. Over- 50s specialist Saga, plus the AA and nFU Mutual, are among the very few still accepting cheques as a payment option.

More than half of energy tariffs now refuse cash and cheques — known as payment upon receipt — according to comparison service Energyhelpline. A quarter of the deals from the Big Six energy firms also ban this form of payment.

And, even if utility firms do accept cheques, these customers can be billed hundreds of pounds more every year than those who pay by direct debit. For example, Virgin Media broadband charges £60 more a year to pay via cheque or cash than with a direct debit. On top of this, it is becoming ever-more difficult to even get a cheque book, as banks no longer give them out automatically.

Yet charities say that the cheque — a form of payment dating back to the 17th century — remains vital to many customers, particularly the elderly, some of whom are not comfortable using online banking.

And, while use has declined dramatically since the nineties, customers still wrote 401 million cheques last year.

Caroline Abrahams, charity director at Age UK, says: ‘Cheque use may be dwindling, but they remain an essential service for those older people who rely on them for doing things such as paying care bills.

‘It’s vital that people in this position are given the option to keep a cheque book and warned individually and in good time — not just by a standard letter — if they have to specifically request one.’

According to comparison site uSwitch, the cheapest energy tariff for direct debit customers is also £159 a year less than the best deal for those paying by cheque.

Many new, smaller suppliers — including Affect Energy, Flow, Green Energy, Igloo Energy, Octopus Energy and Yorkshire Energy — only accept direct debit.

Direct debits reduce the chance that customers will not pay — and they also cut companies’ administrative costs.

Skilled tradesmen, schools, charities and sole traders also seem discouraged from accepting this traditional payment method.

High fees for depositing cheques have forced some small businesses and entrepreneurs to ban this form of payment altogether.

Two- thirds of business bank accounts now charge companies and sole traders to deposit cheques over-the-counter, with banks such as Barclays and Danske Bank charging up to £1.50 a time.

Mike Cherry, the national chairman of the Federation of Small Businesses, says: ‘ Even as more businesses go cash-free, each year around 1.2 million cheques a day are cleared across the country.

‘They remain a convenient and secure method of payment and small firms shouldn’t be unfairly charged for that while people still want to use them.’

Tradesmen such as milkmen are among the traditional businesses still accepting cheques — despite the cost to themselves.

Clare Lillie, whose father and uncle set up the milk delivery service Lillie Brothers in 1974, says: ‘We still have quite a few customers who want to leave out a cheque for the milkman to collect on their deliveries — as well as businesses that want to pay by cheque, too.

‘While it’s not as common, it tends to be the older generations. They feel comfortable with it and they can track their money.’

However, one milkman in north Yorkshire admits that it is an inconvenient and costly option.

He says: ‘Unfortunately, the bank does charge us to pay cheques into our account. For a small business, with small profit margins, the costs of depositing cheques are quite significant.

‘We still accept them as a method of payment, because we understand some people feel they’re more secure than bank transfers or cash, but we would prefer it if they didn’t pay by cheque.’

He adds: ‘We realise people don’t always have the cash on them, or may not do online banking, so we still offer it. It’s important to people, so it’s important to us.’

Around one in five business bank accounts even charges companies to deposit cheques into an ATM, billing them up to 35p a time, according to Moneyfacts. Meanwhile, natWest and royal Bank of Scotland became the last bank to stop automatically issuing cheque books to new customers this year.

now, current account customers must specifically request one, following in the footsteps of HSBC, Barclays and Lloyds. new