Skip to main content. How bank drafts work: When you ask to purchase a bank draft, the funds are immediately withdrawn from your deposit account. These funds are put into the bank's reserve account until the bank draft is presented for payment.
As the purchaser of the bank draft, you are responsible for delivering the bank draft to the payee. After this time, the money cannot be claimed back by your bank without your consent, unless you are a knowing party to fraud. For savings accounts, the timescales are , which means that you can withdraw the money at the start of the sixth working day after paying in the draft.
If certainty is important to you, you should not hand over any goods or provide any services until you know for sure that the funds are yours to keep. Alternatively, if you are in any doubt that the draft is genuine because you do not absolutely know and trust the person from whom you are accepting payment, it is better to ask for a Faster Payment or a CHAPS payment.
These are both are same-day, and irrevocable ways to pay. The Faster Payment Service is free to consumers — online, mobile and telephone banking payments are all made this way.
So if you are selling a car, for example, or accepting another large payment, you may wish to consider sharing the cost of a CHAPS payment with the buyer, so that you can both be certain that the transaction will be cleared. These drafts are subject to the laws and practices of the countries where they are drawn rather than those in the UK. If a bank draft is lost or stolen, reporting it immediately to your financial institution is critical to having the bank put a stop on the draft.
There are certain reasons why a bank will most likely agree to cancel a draft and It is difficult to cancel or stop payment on a bank draft outside of these conditions because, in effect, a bank draft represents a transaction that has already occurred. Since the buyer has already paid the funds to obtain the bank draft, the only means of effectively canceling the draft is to have the seller cash it and return the funds to the buyer.
However, if the draft has been lost, stolen or destroyed, the buyer may be able to cancel the draft by returning to his bank, explaining that the draft is irretrievable by either himself or the seller, and presenting to the bank the reference number or a printed copy of the draft. As long as the bank can verify that the draft has not been cashed, it can cancel it and issue a new, replacement draft.
It is a good idea to verify cancellation and replacement policies with the issuing bank. Checking Accounts. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.
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