Bank Draft

A bank draft is a guaranteed payment instrument issued by a bank, essentially a check that is drawn on the bank’s own funds rather than an individual’s account.

It provides a higher level of security than a personal check.

Bank drafts are commonly used for large transactions, such as purchasing a car, making a down payment on a house, or sending money internationally.

They are considered a safer form of payment because the funds are guaranteed by the bank, reducing the risk of the payment being declined. To obtain a bank draft, you typically need to provide the bank with the recipient’s name and address, as well as the amount of the payment.

The bank will then issue the bank draft, which you can deliver to the recipient.

• Related Terms: Certified Check, Money Order, Payment, Bank, Guaranteed Funds