What Is a Bank Draft?

662 Words3 Pages
What is a Bank Draft? One definition of a bank draft is a check drawn from bank funds. An example is a cashier’s check. The term bank draft is sometimes used to refer to an automatic transfer from your bank account to your service provider. Bank drafts are used to pay people or institutions with guaranteed funds. When purchasing real estate, you may be required to use a bank draft instead of a personal check. These drafts are also used in international trade. Bank drafts are more secure for sellers because the funds are guaranteed by the bank that issued the draft. If you write a personal check, your check may bounce. However, banks only issue bank drafts after they have taken money from your account to ensure that sellers have a better chance of getting paid. This article discusses the concept of bank drafts, benefits and advantages What is the Concept of Bank Drafts in Canada? TD Canada Trust explains that there are different categories for bank drafts such as money orders or cashier’s cheques. Bank drafts remain as secure alternatives to writing cheques or opening foreign currency accounts. You must open an account to pay for a bank draft through cash, personal cheques or direct debit from your account. Bank drafts can be obtained in TD Canada Trust branches. These are the recognized currencies: US dollars, Sterling pounds, Euro or Japanese Yen and 21other foreign currencies. Bank drafts are a secured and convenient way of paying for commodities such as supplies through online means. What is the Objective of Bank Drafts? The principal objective of bank drafts is to offer the convenience of cash with a level of security which is more beneficial than with a personal check. This is reflected in a common alternative name for bank drafts: cashier’s cheques. The main technical difference between a cheque and a personal check is that the bank draft

More about What Is a Bank Draft?

Open Document