Bank Draft vs Certified Cheque: Key Differences & When to Use Each
A bank draft is a prepaid instrument issued by a bank, guaranteeing the payee gets funds from the bank itself. A certified cheque is drawn on the customer’s account, with the bank “certifying” the money is set aside.
People confuse them because both feel “bank-backed” and promise payment security. Yet one pulls from the bank’s vault, the other locks down the buyer’s money—causing panic when sellers reject the “wrong” one at closing.
Key Differences
Bank drafts: paid for upfront by buyer, issued by bank, funds guaranteed by bank. Certified cheques: customer’s cheque, bank verifies and earmarks funds. Drafts cost ~$7–$10, cheques ~$5–$15. Drafts often needed for large, out-of-country transactions; cheques suit domestic deals.
Which One Should You Choose?
Need bulletproof credibility abroad? Grab a bank draft. Staying domestic and want to use your own account? Certified cheque is faster and cheaper. Always confirm what the receiver demands before you pay the fee.
Examples and Daily Life
Landlord in Toronto wants first month’s rent? Certified cheque works. Buying a used car in Buffalo from a cautious seller? Bank draft seals the deal. Both save you from carrying fat stacks of cash.
Can I cancel either one once issued?
Bank drafts are hard to cancel; certified cheques can be stopped if lost, though banks demand hefty paperwork.
Do both clear instantly?
No. Certified cheques may still hold one business day; bank drafts can hold longer if crossing borders.
Are there spending limits?
Drafts scale to millions; certified cheques cap at your available balance.