Your checklist for using cheques

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The guarantee card is no more but the chequebook has been saved.

Do you still use your chequebook? To some, the cheque is an anachronism, while to others it is a payment lifeline. Last week the Payments Council, which represents banks and credit card companies, announced that it would not, after all, be scrapping cheques by 2018, because so many people still use them.

However, experts believe that, because the council withdrew the cheque guarantee scheme at the end of June, it is too late for the cheque to be resuscitated. "The withdrawal of the cheque guarantee card could be a nail in the coffin for cheques whether a deadline exists or not," said Sarah Brooks, director of financial services at the government watchdog Consumer Focus.

She (SNP: ^SHEY - news) is worried that, because these cards no longer exist, people will increasingly refuse to take cheques making life harder for older people and others who rely on them.

"The decision to withdraw the guarantee card only weeks ago was a mistake," she said. "Where possible we would like to see businesses reconsider their decision to stop accepting cheques."

The move has left consumers confused. What does a cheque mean without a guarantee card and which businesses now refuse to take them? This guide should help.

= What has changed? =

Thanks to the popularity of credit and debit cards, as well as e-payment systems such as PayPal, the cheque has been slipping further and further out of favour. Banks (Euronext: SBK.NX - news) and building societies wanted to scrap them by 2018, but said they would only do so if they could find a viable alternative. However, a public outcry resulted in them changing this decision last week, so you will still be able to pay by cheque for the forseeable future.

= If cheques are still valid, why don't I have a guarantee card any more? =

If you look at the back of your bank debit card, chances are it will not say that it is a cheque guarantee card. So although you can still write cheques, individuals and businesses who accept them will no longer be able to rely on the issuing bank honouring payments of up to £250 as a matter of course.

A spokesman for the Payments Council said the scheme was "widely misunderstood" and insisted it would not be reconsidering the decision. However, it does mean that many businesses especially small ones may be more reluctant to accept payment by cheque, while individuals should also be aware that a cheque is now only as safe as the person who has written it.

= Is that why my supermarket won't take cheques now? =

Partly, but the other reason why a long list of retailers (including most major supermarkets, Marks & Spencer (Dusseldorf: MA6.DU - news) and Boots) don't accept them is that they hold people up. "Shoppers don't like queues and so retailers don't like queues," says the Payments Council.

Julian Sawyer, chief executive of Bluerock Consulting, said the decision not to scrap the cheque was a "futile gesture".

"Cheques will still be around for now, but people are going to find it harder and harder to use them," he said. "Market forces are at work and they will prevail, leading to increasing marginalisation of cheques."

= So, if shops won't take them, why are they still with us? =

Many people still use cheques to pay tradesmen, or if they wish to send cash through the post. About 1.4 billion cheques are still cashed every year. Charities say that the cheque is vital to their work, as many people use them to donate.

Older people also use them to get round the problem of not having too much cash in the house if they find it hard to get out.

"Abolishing cheques would have made life easier for the banks, but would have made life much harder for their customers," said Ros Altmann, of Saga.

"As well as being a practical system to which they have become accustomed, older people also feel that cheques give some comfort that there's proof their money is moving around under their control.

"And if, for instance, they want to send their grandchildren a birthday gift, donate some money to a small charity or pay their plumber, they will be able to continue with the convenience of cheques."

= If cheques are staying, will they become more efficient? They take a long time to clear. =

The Payments Council acknowledges that more work could be done to improve the clearing system which sits behind cheques. "After all, it is around 300 years old," a spokesman said. He said that as part of other innovations being made by the group, the cheque system might also be improved. If you pay in a cheque at the moment, the funds might not be in your account until up to six working days later. A debit payment, on the other hand, is instant.

= Finally, if cheques are no longer backed by a guarantee card, and few outlets will take them, what are my alternatives? =

In shops, you can pay with cash or a debit or credit card, which usually requires you to memorise a four-digit PIN. If you are sending money through the post you can still use a postal order, although you will pay a fee of 12.5 per cent of the face value of an order over £10 and more for smaller amounts.

Alternatively, it is possible to buy gift cards in various denominations for certain shops if you are sending monetary gifts. If you are sending money to friends you may be able to use an online service such as PayPal.

For paying for school dinners or the milkman, you may find there are online solutions, too. Growing numbers of schools have signed up to initiatives such as ParentPay, which allows online payment with credit or debit cards, while Dairy Crest's Milk&More website allows you to pay your milk bill online.