- Competitive exchange rates
- Flexible transfer options
- Transfer to 50+ currencies
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Similar to a cashier’s cheque, bank drafts are typically used for large payments overseas. Although it isn’t the quickest way to send money, bank drafts are accepted in most countries and still used frequently.
A bank draft is a payment issued by a bank on behalf of the payer, which allows another bank to draw funds directly from the bank issuing the draft. International bank drafts are often used for remittances because the bank draft is immediately converted into a foreign currency when it’s created, unlike a regular cheque.
Bank drafts are often confused with cashier’s cheques and money orders, but have key differences that give bank drafts the advantage when used for international transfers:
A bank draft is effectively a cheque from a financial institution. This means the funds for the transaction are withdrawn from the institution rather than from the cheque drawer’s account.
This offers an important benefit over an ordinary cheque from an individual. The funds from a normal cheque are not withdrawn from the drawer’s account until the cheque is cleared, which means there may not be sufficient funds available when the cheque is cashed and it may therefore bounce.
With a bank draft, however, when a person requests one they must immediately transfer the funds from their account to cover the amount of the cheque. This adds a crucial extra level of security over a normal cheque.
Drafts can be drawn in the foreign currency you choose and are available for personal or business use.
Let’s say you need to send $1,000 to family in Mexico. This example is in USD. Here’s what you might face as far as costs when using a bank draft compared to an international money transfer as of September 14, 2020.
|Money transfer||Bank draft|
|Fee||$0||$30 + receiving bank fees|
|Exchange rate||1 USD = 21.035 MXN||1 USD = 19.933 EUR|
|Transfer speed||1-2 days||1-3 weeks, depending on mail|
|Amount received||MXN 21,035||MXN 19,335|
The bank draft ends up being the slowest and gets the smallest amount of money to your recipient in Mexico. If you go with the money transfer service, your recipient ends up with MXN 1,700 more than the bank offers. If speed is crucial, a cash transfer can typically have your transfer to MExico in as little as 15 minutes — just make sure there’s a cash pickup location near your recipient before sending.
Bank drafts are cashed just like any other cheque, but must be deposited into your bank account. Cash your bank draft in a variety of ways, including:
Bank drafts are secure ways to send money. But when sending an international transfer, you have to rely on the postal service to deliver the bank draft safely. Many things can go wrong along the way, and even when everything goes right, there will still be a significant delay between sending and receiving the bank draft.
Consider using an international money transfer service instead of a bank draft when speed and convenience are crucial.
The transfer services below are not bank drafts, but rather allow you to make bank transfers which can be received by your recipient in their bank account or as cash. Consider using these services when:
There are a couple of factors to keep in mind when comparing bank drafts, to make sure you end up with the most cash in your pocket.
Bank drafts have their time and place, but as the financial world shifts more and more into the digital realm, bank drafts may become obsolete. There are many ways to send money internationally that can be done entirely online — to learn how to get started with international money transfers, head over to our guide on transferring money.
SPONSORED: How you can save when sending money abroad for festive occasions with Simplii Financial.Read more…
Here’s what you need to know about Western Union fees and exchange rates for international money transfers from Canada.Read more…
SPONSORED: From cashback to super low fees, here are the Top 5 bonus features to look for in a money transfer—and how Simplii Financial can help you.Read more…
SPONSORED: How you can save when sending money abroad for festive occasions with Simplii Financial.
Payday loans are considered easy to get, but they’re also expensive. Before you apply, here’s what you need to know.
Learn how to easily sell Solana (SOL) by following our step-by-step guide and compare 10+ crypto exchanges. Get started today.
If you’re looking for ways to gain exposure to Bitcoin and other digital currencies, cryptocurrency ETFs could be worth exploring. Find out what crypto ETFs are and how they work in this introductory guide.
Looking for alternatives to Revolut? These challenger banks and financial apps may be just what you need.
Enjoy unlimited free transactions and zero monthly account fees with this basic chequing account.
If you’re looking for a $600 loan, consider paycheque advance apps, cash advances, overdrafts and other options.
Here’s what you need to know about Western Union fees and exchange rates for international money transfers from Canada.
SPONSORED: From cashback to super low fees, here are the Top 5 bonus features to look for in a money transfer—and how Simplii Financial can help you.
Make simple and small transfers to the Philippines through the IREMITX app.
You must be logged in to post a comment.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.