The cheque could be saved
The future of cheques could be saved by the powerful Parliamentary Treasury Select Committee.
In December 2009 the Board of the UK Payments Council, an organisation of financial institutions which sets the strategy for UK payments, announced that cheques would be phased out by 2018, but that this would happen only if suitable electronic alternatives were developed.
But, inundated with public concern about the use of online technologies instead of the cheque, the Committee announced on Wednesday it will reopen its inquiry to reconsider the alternatives.
Treasury Committee Chairman, Andrew Tyrie MP, says: "The Payments Council had seemingly forgotten about the millions of people who remain less at ease with the latest technology. Since our last inquiry we have been inundated with letters from the public telling us that they rely on cheques. Many charities, small business and vulnerable people - including pensioners - depends on cheques. Their needs must be considered."
Tyrie says consumers should not be forced into shredding their cheque books.
He adds: "We will also want to examine whether it is in the public interest that apparently competition, can and should, be set aside on this. I was shocked, when the Payments Council last gave evidence, that they had not conducted a rigorous cost benefit analysis. We asked them to go away and do some number crunching. In this new inquiry we can now examine their latest conclusions and work."
Sarah Brooks, head of financial services at consumer organisation Consumer Focus, welcomed the news.
She says: "Banning cheques could spell bad news for many who rely on them, especially older people, small businesses or the self-employed. Not everyone has internet access, can easily get to cash machines or is willing to pay by credit card or share their bank details to organise electronic payments."
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.