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The term bank draft refers to a negotiable instrument that can be used as payment just like a check. Unlike a check, though, a bank draft is guaranteed by the issuing bank.

Cashier's checks are generally regarded as the safer bet since the funds are drawn against the bank's account, not an individual person's or business's account.

The main difference is that someone who receives a bank draft has a guarantee that the funds are available, as opposed to a regular cheque, which could bounce. Bank drafts are made out to the person receiving the money. Your name and the amount will also appear on the draft.

Bank draft: Made out by a financial institution that guarantees the funds after withdrawing the amount from one of your accounts. Bank drafts can be made out in foreign currencies. Certified cheque: Similar to a bank draft, but the money isn't withdrawn from your account.

How is the demand draft and cashier's order different? Demand draft is normally used for overseas remittance and is denominated in a foreign currency whereas cashier's order is normally used for local payment and is denominated in local currency.

A bank draft is a payment on behalf of the payer, which is guaranteed by the issuing bank. A draft is used when the payee wants a highly secure form of payment. The bank can safely issue this guarantee because it immediately debits the payer's account for the amount of the check, and therefore has no risk.

How long does a banker's draft take to clear? The money on a banker's draft is accessible four days after it's been paid in. However, you won't be sure it's cleared (the money is really yours) until six working days after it's been paid it in.