The high street bank HSBC has announced it is cutting the cheque guarantee limit on debit cards for some of its customers.

Currently around 300,000 HSBC customers have a cheque guarantee limit of £250. This will now be reduced to the standard £100 cheque guarantee available to the majority of the bank’s customers. However, debit card payments up to £250 will still be guaranteed.

HSBC said that it was cutting the higher cheque guarantee limit in an attempt to minimise losses from cheque fraud and to discourage people from spending money they did not have.

The banking industry as a whole is planning on phasing out cheque guarantee cards by 2011. Many retailers no longer accept cheques, and only 7% of cheques written are backed up by a cheque guarantee card.

HSBC said that although it had not had particular problems with misuse of cheque guarantee cards among its 10 million current account customers in the UK, the move was designed to minimise the risk customers overspending.

“It is about reducing risk from a mechanism that allows a customer to continue to make purchases from their current account when they know they don’t have the funds or an approved overdraft,” said a spokesman for the bank.

“Customers can certainly still write cheques for more than £100, but the cheque guarantee only covers cheques to that value,” he added.

HSBC Customers affected by the change are generally those who previously asked for a larger cheque guarantee limit. These customers were warned last year that this privilege could be removed when the bank moved its debit cards from the Maestro system to that of its rival Visa.

About 88% of cheque guarantee cards in the UK have guarantee limits of £50 or £100.

This entry was posted on Wednesday, July 8th, 2009 at 8:51 am and is filed under Banking, Credit, Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.