Difference Between Bank Draft and Cashier's Check: A Comprehensive Guide

A bank draft and a cashier's check may seem like similar financial instruments, but they serve different purposes and have distinct characteristics. A bank draft is a written order issued by a bank to pay a specific amount to a third party.

To issue a bank draft, a customer must have a bank account with sufficient funds, and the bank will debit the account to cover the draft. This process is typically used for international transactions or when a customer needs to make a large payment.

In contrast, a cashier's check is a check guaranteed by the bank, meaning the bank has already verified the customer's funds and is responsible for the payment. Cashier's checks are often used for local transactions or when a customer wants to make a payment to a third party without using their own funds.

Bank drafts and cashier's checks both offer a level of security, but they cater to different needs and situations.

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A bank draft is a secure form of payment that's similar to a cashier's check. It's issued to draw on funds held with a financial institution, and the issuing bank or institution guarantees payment.

To get a bank draft, you'll need to visit your bank and provide a teller with a government-issued ID, your account information, the recipient's name and payment amount. They'll check your account for sufficient funds and then issue a bank draft.

A bank draft is not typically required to be signed, as it could be forged. You need to have a sufficient balance in your account to cover the draft request.

Here are the key differences between a bank draft and a cashier's check:

A bank draft involves a drawer and payee transacting a lump sum of money via a draft. The bank freezes that amount or transacts the same to the other bank account.

Only the payee may cash or deposit the draft.

A bank draft and a cheque may seem similar, but they have some key differences. A bank draft is a secure form of payment that's similar to a cashier's check, and it's issued by a financial institution to draw on funds held with a financial institution.

The process of dealing with bank drafts is quite simple and involves a drawer and payee transacting a lump sum of money via a draft. A bank draft is not typically required to be signed, as there's a possibility it could be forged.

One of the main differences between a bank draft and a cheque is who writes and signs it. A bank draft is written and signed by a financial institution, whereas a cheque is written and signed by a bank customer.

Here's a comparison of a bank draft and a cheque:

You can't stop payments or cancel a bank draft, as the bank blocks or sets aside the funds before transferring them to the payee. Once initiated, you can't change the transaction unless there are exceptional circumstances.

Cashier's checks and bank drafts are both secure forms of payment, but they have some key differences. Both are guaranteed by a bank, making them more secure than personal checks.

Cashier's checks are generally viewed as the safer bet because the funds are drawn against the bank's account, not an individual person's or business's account. This means the bank is responsible for ensuring the funds are available.

Certified checks, on the other hand, are special types of regular checks that are guaranteed by the bank. The bank confirms that the person writing the check has enough money to cover it.

Bank drafts are similar to cashier's checks in that they are guaranteed by a bank, but they don't require a signature from the customer. Instead, bank officials sign them, making them more secure.

Here's a comparison of the two:

Overall, both cashier's checks and bank drafts are secure forms of payment, but cashier's checks are generally regarded as the safer option due to the funds being drawn from the bank's account.

A bank draft is essentially a secure form of payment that's similar to a cashier's check. To get a bank draft, you'll need to visit your bank and provide your account information, the recipient's name, and the payment amount.

A teller will check your account for sufficient funds and issue the bank draft. You'll then give the draft to the recipient, who can deposit it into their account to complete the transfer.

Here's a key difference between a bank draft and a cashier's check: a bank draft is typically not required to be signed, as it's issued by the bank and guaranteed to be paid.

To initiate a bank draft, you'll need to have a sufficient balance in your account to cover the draft request. The bank will freeze that amount or transfer it to the other bank account.

A bank draft is all about transacting funds from one bank account to another, which may be at the same bank or a different one with the same account owner.

Here are the key steps involved in a bank draft transaction:

The bank guarantees payment, and the transaction is essentially irreversible once initiated.

Fees for bank drafts and certified cheques can be steep, ranging from $9.50 to $20, depending on the payment method and whether the recipient is an account holder.

Some bank account service plans, particularly the premium packages, can waive these fees, making it a worthwhile investment if you frequently send or receive large payments.

Money orders are a more affordable option, with fees starting at $7.50, and no bank account is required to send or receive one.

Availability of funds also varies between payment methods, with bank drafts and certified cheques typically taking a few business days to process, while money orders are available immediately when cashed.

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Fees can add up quickly, especially when it comes to bank-related services. Bank draft fees typically range between $9.50 and $9.95.

Some payment methods are more expensive than others. Certified cheques can cost up to $20, depending on the issuing bank's policies.

If you're looking for a cheaper option, money orders might be the way to go. Fees for money orders start at $7.50.

Some bank account service plans can help you save money on fees. Premium packages often waive these fees, making them a worthwhile investment for frequent users.

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Availability is a crucial factor to consider when choosing a payment method. For bank drafts and certified cheques, the funds are usually available in the recipient’s account within a few business days.

Some banks will release a portion of the funds right away. Money orders are available immediately when cashed.

No bank account is required to send or receive a money order, making it a convenient option for those who don't have access to banking services.

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Cashier's checks and certified checks don't clear immediately. Federal regulations require banks to make funds deposited in an account by cashier's, certified, or teller's checks available for withdrawal no later than the business day after the banking day on which the deposit takes place.

The funds from a bank draft generally take two business days or more to clear, with holding time policy varying by bank. For instance, Wells Fargo might hold any deposit for up to seven days.

A cashier's check can bounce, just like a personal check. Counterfeit cashier's checks can look very authentic, but the check can still bounce if it's a forgery.

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Cashier's checks and certified checks do not clear immediately. Federal regulations require banks to make funds deposited in an account by cashier's, certified, or teller's checks available for withdrawal no later than the business day after the banking day on which the deposit takes place.

The money won't be immediately available to the recipient, as banks have to follow these regulations.

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A cashier's check can bounce, just like any other check. Counterfeit cashier's checks can look very authentic, making it difficult to distinguish them from real ones.

A cashier's check is not the same as cash, and just because the money appears to be available in your account doesn't mean that the check has cleared and is legitimate.

Here are some reasons why a cashier's check can bounce:

It's essential to remember that a cashier's check is still a check, and it can be subject to the same risks as any other check.

A bank draft is a great option for large purchases, such as down payments on a home or car, because it's a guaranteed, prepaid method of payment.

For instance, if you're buying a house, you'll need to make a significant down payment. In this case, a bank draft is a good choice because it ensures the seller that the funds are available.

A bank draft is also a good idea for loan payoffs or payments to a contractor for major work, as the payee doesn't want to risk insufficient funds.

You'll need to have sufficient funds in your account to cover the draft request, so make sure you have enough money set aside.

A bank draft is a secure form of payment, similar to a cashier's check, and it's not typically required to be signed.

It's a good idea to use a bank draft for transactions that require a lump sum of money, such as paying a contractor or making a down payment.

You can use a bank draft to transfer funds from one bank account to another, whether they're at the same bank or a different one with the same account owner.

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When choosing between a bank draft and a cashier's check, it's essential to consider the costs involved.

A bank draft can cost anywhere from $5 to $15, depending on the bank and your account type. Some banks may offer a certain number of bank checks at no charge.

Personal checks, on the other hand, can be free or cost under $1 to write, depending on your book of checks.

However, if you have insufficient funds to cover a check, you might face an overdraft fee of $30 or more. This is the largest hidden cost of using personal checks.

Here's a quick comparison of the costs: