Did you receive a foreign cheque from abroad? Whether you are repatriating funds or simply getting paid by someone abroad, you could be facing several difficulties.
As simple and as straightforward as cashing a foreign cheque may sound, it comes with great hassles that remind us of how the banking system, and the world, operated some 100 years ago. It is unbelievable to us that this process is still as cumbersome, expensive, and borderline-impossible as it is.
Our reader Jason has contacted us some time ago with an inquiry and we took on the chance to discover the best way to cash a foreign cheque in the UK.
Below are our preliminary findings, in addition to the entire correspondence.
Are Banks Expensive for Cashing Foreign Cheques in UK?
Our findings are as follows š
a. UK banks will cash foreign cheques but it will be expensive – it can cost you up to 5% of the cheque’s value with a bank. The clearing process take 6-7 days and will depend on a process called negotiation against the issuer of the cheque, which may be unsuccessful. If that process is indeed unsuccessful, it will take up to 6 weeks to clear the cheque!
b. Money transfer service providers such as Currencies Direct will not be able to cash or accept cheques made to the name of their clients. If you can change the cheque’s recipient to Currencies Direct, they will happily accept it and cash it instantly for a competitive FX fee, saving up to 80% of the associated foreign cheque cashing costs.
Can I Cash a foreign cheque for cheap?
š¬We believe the best and most efficient way to cash a foreign cash in the UK, while minimising fees, would be through a designated service i.e. international money transfer service. Re-issuing the cheque in the name of the company may be a slight hassle but for a large amount it may result in saving of hundreds or thousands of pounds.
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Cashing a USD Cheque in the UK
We have been contacted by one of our readers who told us that unfortunately neither of the companies above is now accepting USD cheques in the UK or able to cash them (unlike how it’s been beforehand – updated August 11 2022). Our staff is working on speaking to more providers until we find a provider who is happy to cash USD cheques.
In detail…
The story of Jason’s USD cheque and his attempts of cashing it
Our reader Jason has contacted us some time ago with an inquiry. He wanted to cash in his U.S cheque in the UK without having to wait for the funds to be cleared over a period of 6 weeks as the bank proposed to him. He wanted to inquire whether any of the FX companies we know can help him in his situation.
After some back and forth, he conducted a thorough research. Here are his findings. Please note that this e-mail is published with Jason’s consent. We are extremely gratful that he brought this to our attention.
Jason’s Email & Summary of his Findings
Cashing a U.S cheque in the UK
September 10, 2018 – Original inquiry sent via our Contact Us form
I approached two of the largest FX dealers in London (and the world, for that matter,) World First FX Services and Caxton. Both companies will exchange any currency you have for any other you want, and/or, wire transfer funds for you with FX rates on razor-thin margins, which beat the high street bankās rates by a āNew York mile.ā
Iāve been using these companies for years for my FX needs. Bottom line with them is simple and terse: They do NOT negotiate cheques, cash cheques or accept cheques under any circumstances. This is what they told me.I then took the USD cheque in question to 3 of Britain’s largest high street banks, namely; Barclays, HSBC and Lloyd’s. They each gave me the same information.
They send USD cheques presented to them for deposit back to the United States for collection, which all 3 banks said takes an average time of 6 weeks, after which they credit their customer in the U.K. But this is ONLY if their customer specifically states they want to āsend the cheque for collection.ā
The customer does, however, have a secondary option.
All three of these banks have a ‘system’ in place wherein they will do what they referred to as: ‘negotiating the cheque‘ on behalf of their customer. This phrase, “negotiating the cheque” may be left to one’s imagination, however, I think I get the drift. If the negotiation is successful, these 3 banks will exchange the USD cheque into Pound Sterling equivalent at the prevailing bank FX rate on the day, minus a fee and then credit their customer’s account for that amount of Pounds . . . āafter about 6 or 7 banking days.ā
A deposit receipt is then sent to their customer. The banks then send the cheque to America for collection. If the above-described negotiation is not successful, the customer is left with 2 other choices:
1) tell his or her bank to send the cheque to America for collection, which will take 6 weeks to accomplish if it is in fact cleared, but knowing full well that the U.S.
bank on which the cheque is drawn may not clear the cheque and, if so, it does not have to give a reason for not clearing it.
2) retain the cheque and walk out. If the U.S. bank does not clear the cheque for any reason during the aforementioned average 6 week period, it will inform the U.K. bank, which will then debit their customerās account for the amount they had previously been credited.
The entire scenario illustrated above is of course, in the 21st century, completely outrageous and ridiculous, imo. And in case you’re wondering, I did ask the U.S. state Treasury Department (the government body, which sent the cheque to me) if they would please wire transfer the funds to me, rather than sending a cheque as I clearly explained to them that it was near impossible to cash a USD cheque anywhere in the United Kingdom. Their response was cold and abrupt. ‘We donāt do bank transfers. We only send cheques. This is the policy.’
So there you have the facts. The facts on cashing USD cheques in the U.K. Plain and simple: you CAN’T. (depositing is different)
And the facts directly from the U.S. government Treasury. Plain and simple: “We don’t do bank wires. Our policy.” Hope this letter will be of some assistance to any other viewers of MoneyTransferComparison.com who find themselves “stuck in London with a U.S. dollar cheque they canāt get cashedā like I was. I sincerely do wish them the best of luck and hope they donāt get hit with a migraine headache.
Kind regards,
Jason ? ”
Cashing a foreign cheque with a money transfer company
We have made our inquiries to some of our partners in the money transfer field. The first to respond was probably the most agile and flexible money transfer firm out of the “big 10” – Currencies Direct. They have indicated that they cannot accept cheques made paypable to an individual but they can quickly clear cheques made payable to Currencies Direct. In other words, before you receive that cheque, you will need to know who is your FX provider and have the cheque to its name.
Currencies Direct or similar leading money transfer companies won’t charge you anything for clearing the cheque – but the standard FX margins they apply on all foreign currency transfers will apply, of course.
Alternatively you can always cash a cheque with a UK bank with the limitations stated above.
- Barclays
- HSBC
- NatWest
- Lloyds
- Stander
all accept foreign cheques, whether US dollar chques, Euro, or other currencies.
What did Jason do and how did it go?
“Dear ‘Sir’ or ‘Madam,’ – (sorry, I don’t know as you never put a name to your emails . . .) I just thought you would like to know that Lloyds bank took just 24 hours to ‘negotiate’ my USD cheque after which they credited my account in Pounds. The only disappointment was the 5% ‘profit’ they helped themselves to out of MY money.
FIVE PER CENT!
This is a huge hit when you’re dealing with a 5 figures cheque. Thousands of Pounds in fact. Outright theft, imo. I am very angry about this and will take it up with them first thing tomorrow morning.
This is an absolutely horrible exchange rate. They ‘bought’ the dollars at USD 1.334 to the Pound. Outrageous! Other banks’ spreads are usually between 1 – 1Ā½ % Iāll be buying more gold and more crypto.
I am totally fed up with fiat money.Regards, Jason”
Concluding Words
Based on our findings, there is no way to cash in your foreign cheque. You have one of two alternatives – either get it on the name of the your foreign exchange provider so they can cash it instantly and for lower fees (hence “the best way to cash a foreign cheque in UK 2021” title), or use a bank to deposit it and wait 6 weeks for clearance, or use the bank’s negotiation service and pay through your nose. We are sure there are other solutions as well but knowing the financial services industry we would assume these solutions are more apt to small businesses receiving cheques from abroad on a regular basis than a one-off foreign cheque.