Payments & Drafts check0 / 1 answered · 0 correct
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What is a sensible first description of a bank draft?
Bank Draft / Banker’s Draft
Learn what a bank-issued draft is and why terminology differs by country.
Simple meaning
A bank draft, often called a banker’s draft in some markets, is a payment instrument issued by a bank. The purchaser normally provides the funds or has the amount charged before the bank issues it.
Why people use it
The payee may prefer an instrument issued by a bank rather than relying on the payer’s personal cheque. It is still necessary to verify authenticity and local clearing rules.
Not risk-free
Counterfeit, altered or fraudulently obtained drafts exist. A paper that looks like a bank draft should not be treated as cash merely because it carries a bank name.
Terminology varies
Bank draft, banker’s draft, demand draft, cashier’s cheque and cashier’s order are used differently across jurisdictions. MyGreed teaches the concepts, then tells users to check their local bank.
Remember thisA bank draft is a bank-issued payment instrument; it is not the same thing as a draft under an LC.
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