Bank drafts are generally recommended for big amounts, i. Some financial institutions no longer certify cheques. Bank drafts are useful for major purchases where a significant amount of money changes hands. For example, you could use a bank draft:. It can take a few days between when the money is withdrawn from your account and when the funds are available. Sign up for our newsletter to get recent publications, expert advice and invitations to upcoming events.
Sign up for our newsletter. Your bank draft is irrevocable as soon as you hand it over in payment. If you need to send a large amount to someone in another country, e-transfers are another good option for sending funds anywhere in the world. That means that if the person you give the bank draft to loses and then finds it again, they can still deposit it, at your expense, even if you gave them a replacement bank draft.
It may be possible to trace the bank draft and buy back the non-negotiable part under certain conditions. If you change your mind and decide not to make the purchase or if the seller cancels the sale, you can get a refund on your bank draft. All you need to do is bring both parts of the draft to your financial institution.
To make sure the document you have in your hands is the real deal, contact the financial institution that issued the draft. All in all, bank drafts are a handy payment method for making large purchases. Of course, there are other secure forms of payment in use these days, such as Interac e-Transfers. Find a National Bank location near you. Interac e-Transfer is a registered trademark of Interac Corp. Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. As long as the bank can verify that the draft has not been cashed, it can cancel it and issue a new, replacement draft. It is a good idea to verify cancellation and replacement policies with the issuing bank. Checking Accounts. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Banking Checking Accounts. Key Takeaways A bank draft is also referred to as a bank check or cashier's check. Some financial institutions abroad may not accept a draft that is over six months old. Bank drafts are often used when buying a home or condo, a new car, or even renting an apartment. Skip to main content.
How bank drafts work: When you ask to purchase a bank draft, the funds are immediately withdrawn from your deposit account. These funds are put into the bank's reserve account until the bank draft is presented for payment. As the purchaser of the bank draft, you are responsible for delivering the bank draft to the payee. Once the bank draft has been deposited by that individual or entity, their financial institution may still put a hold on the funds until the bank draft clears the payments system.
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