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18-08-2005, 14:55   #1
BrianD3
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How do Bank Drafts work

This may sound like a silly question but how exactly does a bank draft work. I need to take around 20 grand out of my account to pay someone. Payment must be in the form of either a personal cheque or a draft. I don't have a chequebook so I'm stuck with drafts.

First question: with a draft, does the money come out of your account straightaway?

Lets say I get the draft and lose it, what happens? Is it the same as losing cash (i.e. no comeback) as someone told me.

Also what happens if i get the draft but change my mind before handing it over to the person I'm paying. Can I bring it back to the bank and get a refund?

I just want to be clear about this as 20 grand isn't a small amount of money for me
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18-08-2005, 15:57   #2
jesus_thats_gre
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I would imagine it is a cross between a postal order and a cheque :-/ If you get me...
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18-08-2005, 16:34   #3
dahamsta
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Only the first answer is relatively authoritative...

Quote:
Originally Posted by BrianD3
First question: with a draft, does the money come out of your account straightaway?
Yes. Drafts are like cash, you have to pay for it there and then.

Quote:
Lets say I get the draft and lose it, what happens? Is it the same as losing cash (i.e. no comeback) as someone told me.
I'm pretty sure it is, but you should ask the bank about it.

Quote:
Also what happens if i get the draft but change my mind before handing it over to the person I'm paying. Can I bring it back to the bank and get a refund?
Ditto above.

adam
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18-08-2005, 21:20   #4
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Quote:
Originally Posted by BrianD3
This may sound like a silly question but how exactly does a bank draft work. I need to take around 20 grand out of my account to pay someone. Payment must be in the form of either a personal cheque or a draft. I don't have a chequebook so I'm stuck with drafts.
A draft is a cheque which is drawn on the account of a bank, rather than on the individuals account - thats why its is considered safer from a credit risk point of view.

Quote:
Originally Posted by BrianD3
First question: with a draft, does the money come out of your account straightaway?
Yes.

Quote:
Originally Posted by BrianD3
Lets say I get the draft and lose it, what happens? Is it the same as losing cash (i.e. no comeback) as someone told me.
No, its safer than losing cash, because only the payee should be able to cash/lodge the draft. However, someone else could in theory manage to negotiate the draft and if the bank are refunding you for a lost draft they will likely ask you to sign a form indemnifying them against such an occurrence ie you would have to take the loss not them.

Quote:
Originally Posted by BrianD3
Also what happens if i get the draft but change my mind before handing it over to the person I'm paying. Can I bring it back to the bank and get a refund?
Yes.
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19-08-2005, 08:23   #5
qwertz
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Keep in mind that a lot of banks have a long waiting period if you report a draft as lost, some over six month.
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21-08-2005, 18:42   #6
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Quote:
Originally Posted by BrianD3
...I need to take around 20 grand out of my account to pay someone....
being in possession of a piece of paper worth 20k is too risky, you should consider getting 10 x 2,000 drafts, or whatever combination you prefer

you will have to pay commission on each though

so might I suggest you lodge the 20k to the credit union and then get a 10 x 2,000 cheques from them (they dont charge commission on cheques)

I have done this myself (to pay a garage for a new car)
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21-08-2005, 18:52   #7
dahamsta
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He'll still be carrying €20k.
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21-08-2005, 19:42   #8
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Why can't you transfer the money directly to their account?
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22-08-2005, 19:32   #9
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Wasn't there some thing on the news a year or two back? A couple sold their house and posted a e250K cheque over to Ireland which got lost in the post. The bank refused to reimburse them because it's exactly like cash.

Bank drafts are rather annoying though. Try direct funds transfer like chump suggests
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22-08-2005, 19:47   #10
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Least risky strategy might be to meet the seller at/outside/near the bank and hand over the draft straight away?

Be aware that the bank are going to be very interested in where the €20k is coming from (ML regulations and all), and you will have to produce ID etc. It may be the case that only the bank/branch where you have your current account will let you buy a draft.
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28-08-2005, 21:53   #11
RainyDay
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Quote:
Originally Posted by ciaranfo
Wasn't there some thing on the news a year or two back? A couple sold their house and posted a e250K cheque over to Ireland which got lost in the post. The bank refused to reimburse them because it's exactly like cash.
They sent the draft by courier, but they didn't insure it. The standard insurance limit of the courier company (one of the big reputable ones) is quite low. If ever sending a draft by post/courier, make sure you insure it for the value of the draft.
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28-08-2005, 22:14   #12
vector
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as I've said, never send huge drafts. Instead send but multiple drafts of smaller equal amounts in seperate envelopes.
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28-08-2005, 23:00   #13
RainyDay
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Quote:
Originally Posted by vector
as I've said, never send huge drafts. Instead send but multiple drafts of smaller equal amounts in seperate envelopes.
This makes no sense - You're just increasing the risk of loss (albeit a smaller loss). If you need to send a draft by post, just make sure you insure it for the value of the draft.
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29-08-2005, 11:49   #14
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Quote:
Originally Posted by RainyDay
This makes no sense - You're just increasing the risk of loss (albeit a smaller loss). If you need to send a draft by post, just make sure you insure it for the value of the draft.
Each to his own

increasing the risk of loss yes
but as you say its a smaller loss

its just another way of looking at life

something bad may happen but you can at least reduce its severity
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29-08-2005, 11:55   #15
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Word of warning about accepting drafts. They can be very easily forged or altered. Only accept them during business hours and get the number of the bank branch it was issued. Call them and give the draft number and verify with them the amount and it is legit before accepting it..
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