Certified Cheque vs Bank Draft | Canadian Payments

In this article, we’ll be comparing certified cheque vs bank draft.

This article is part of our free series on banking in Canada, which covers everything from opening a bank account in Canada for non-residents to the largest banks in the country – click here to learn more.

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Table of Contents

  1. Certified Cheque vs Bank Draft
  2. What Is the Purpose of a Certified Cheque?
  3. Are Bank Drafts Certified?
  4. How to Choose Between a Certified Cheque and a Bank Draft
  5. Frequently Asked Questions
  6. Ready to Explore Your Options?

Certified Cheque vs Bank Draft

The main difference between a certified cheque and a bank draft is that a certified cheque is a personal cheque that has been certified by the issuing bank while a bank draft is a form of payment that is guaranteed by the bank. Additionally, certified cheques are typically used for smaller transactions while bank drafts are typically used for larger transactions.

What Is the Purpose of a Certified Cheque?

The purpose of a certified cheque is to certify that the person issuing the cheque has sufficient funds to cover the payment. When a cheque is certified, the corresponding funds are frozen in the issuing account until the cheque is cashed. This ensures that the “certification” is valid and the funds remain available.

In most cases, certified cheques are used for medium-sized transactions, such as paying property rent or a security deposit. On the other hand, a bank draft would be used for making larger transactions such as actually purchasing a property or making a large down payment.

Are Bank Drafts Certified?

Bank drafts are not certified. Instead, they are guaranteed by the issuing bank. This is because the bank issuing a bank draft actually issues them directly. In other words, the bank is guaranteeing the payment to the recipient, not the individual requesting the draft.

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How to Choose Between a Certified Cheque and a Bank Draft

To choose between a certified cheque and a bank draft, you need to consider the specific transaction that you are trying to settle. In fact, in most cases, the size and type of the transaction is the main difference between using a certified cheque or a bank draft.

As you’ll see below, both certified cheques and bank drafts offer a secure form of payment with some level of guarantee from a financial institution. However, certified cheques are typically used for medium transactions while bank drafts are used for large transactions.

Here are the benefits of both certified cheques and bank drafts so you can see the similarities between the two.

Benefits of a Certified Cheque

Certified cheques are typically used for medium transactions where the recipient would like a guarantee that the funds are available for transfers.

The specific benefits of a certified cheque include:

  1. Funds are set aside and guaranteed to the recipient
  2. Secure form of payment because they are certified by the bank
  3. You can receive a certified cheque from a branch or online
  4. Most recipients have no hesitation receiving certified cheques

Benefits of a Bank Draft

Bank drafts are typically used for large transactions where funds are being sent to purchase assets like real estate.

The specific benefits of a bank draft include:

  1. Guaranteed payment from the issuing bank
  2. Bank drafts are considered secure by all recipients
  3. Secure form of payment since it comes from the bank
  4. Bank drafts can be used internationally as well

Frequently Asked Questions

Below are three of the most common questions that we receive from people looking into the difference between a certified cheque and a bank draft. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

Which Is Better a Cheque or a Draft?

To determine which is better, a cheque or a draft, you need to consider the specific transaction and any prescribed requirements. For example, it is common for bank drafts to be requested when completing large real estate transactions. On the other hand, cheques are often used for small personal transactions.

Does a Certified Check Clear Immediately?

Yes, a certified check typically clears immediately. However, if your transaction is over a certain threshold, it’s possible that your bank will hold the transaction for verification. If this happens, it’s possible that the funds will not be available for a few days. That said, this typically only happens with larger transactions.

Is a Bank Draft Safer Than a Cheque?

Yes, a bank draft is safer than a personal cheque. That’s because a bank draft is issued by a financial institution and is a guaranteed form of payment. On the other hand, a personal cheque is not guaranteed and can bounce if the issuing person (or business) does not have sufficient funds to cover their transaction.

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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