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Source of funds
- The main difference between bank drafts and money orders is their source of funds: bank drafts are more secure since they are guaranteed by the bank, while money orders are backed by the issuer rather than a bank.
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What is the difference between a bank draft and a money order?
What is a bank draft versus a certified cheque?
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What is the difference between a bank draft, money order and certified cheque? Bank drafts are issued by a bank after verifying available funds and withdrawing the requested amount to put on hold.
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- What Is A Bank Draft?
- What Is A Certified cheque?
- What Is A Money Order?
- Comparing Bank Drafts, Certified Cheques and Money Orders
A bank draftis a secure, physical form of payment to a third party that is guaranteed by the issuing bank or credit union. It’s available in numerous currencies.
A certified cheque is one that’s guaranteed by the issuing financial institution. The bank guarantees availability of the funds by verifying your chequing accountbalance and putting a hold on the amount.
A money orderis another assured payment method that can be used in place of cash or a personal cheque. These are only available in a limited number of currencies, which include United States dollar (USD), Chinese renminbi (RMB) and Indian rupee (INR).
Here’s a breakdown of basic similarities and differences between the bank draft, certified cheque and money order payment methods:
- CAN-legal@nerdwallet.com
May 29, 2022 · Money orders and bank drafts have been around for a long time, but not everyone understands the differences between the two. I recently published a blog post on how money orders work in Canada. This article compares money orders and bank drafts to help you know when to buy either one.
Jun 30, 2023 · Learn the key differences between a money order, certified cheque, and bank draft, including the pros and cons of each and when to use them.
Jul 11, 2024 · Certified Cheque Vs. Money Order – Which Should You Use? Bank drafts, certified cheques, and money orders are secure ways to pay for purchases that are too big for a single credit or debit transaction. They differ in who guarantees the funds, how the funds are held, processing time, and fees.
Sep 29, 2021 · What’s the difference between a bank draft, a certified cheque, and a money order? Although the three payment tools are visually quite similar, there are some differences. With all three, the money is guaranteed by an institution.
Oct 25, 2023 · A bank draft, sometimes referred to as a banker’s draft, is a payment order wherein a bank guarantees the payment of the amount, similar to a check. Unlike money orders, which are prepaid, bank drafts are drawn against funds in a bank account.
