What are Bank Drafts
A bank draft, also known as a bank check or cashier's check, is a form of payment that is guaranteed by the issuing bank. It is similar to a personal check, but instead of being drawn on the account of an individual, it is drawn on the account of the bank itself. This makes bank drafts a safer form of payment than personal checks, as the funds are guaranteed to be available.
To obtain a bank draft, an individual or organization must go to a bank and request one. They will be required to provide the necessary identification and pay the fee for the draft. The bank will then issue the draft, which will include the name of the payee (the person or organization to whom the draft is payable) and the amount of the draft.
The payee can then present the bank draft to the payer (the person or organization that is providing the goods or services), who can then deposit the draft into their account. The funds will be transferred from the bank's account to the payee's account, ensuring that the funds are available.
Bank drafts are often used for large transactions, such as real estate purchases or business deals, as they provide a guarantee of payment. They are also commonly used for international transactions, as they are more widely accepted than personal checks.Adair, S. (2018). The Benefits of Bank Relationships. Retrieved from https://www.investopedia.com/articles/investing/081214/benefits-bank-relationships.asp
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