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Banker’s Cheque vs. Demand Draft: What's the Difference?

Edited by Huma Saeed || By Sara Rehman || Published on February 10, 2024
A banker's cheque is a cheque issued by a bank payable at its own branch, while a demand draft is a negotiable instrument drawn by one bank on another or its own branch.

Key Differences

A banker's cheque, also known as a cashier's cheque, is issued by a bank and guaranteed by the bank itself, making it a secure form of payment. A demand draft, on the other hand, is a financial instrument used to transfer money from one bank account to another.
Sara Rehman
Feb 10, 2024
Banker's cheques are usually used for local transactions within the same city. Demand drafts are more suited for transferring money across different cities or countries.
Huma Saeed
Feb 10, 2024
The funds for a banker's cheque are withdrawn from a customer's account immediately when the cheque is issued. In the case of a demand draft, the amount is paid upfront, and the draft is then sent to the recipient.
Sara Rehman
Feb 10, 2024
A banker's cheque is generally considered a safer form of payment compared to a personal cheque as it is guaranteed by the bank. A demand draft is also secure, but it involves the process of drawing the draft from one bank account and depositing it into another.
Harlon Moss
Feb 10, 2024
Both banker's cheques and demand drafts are used for secure transactions, but the choice depends on the transaction's nature and geographical scope.
Sara Rehman
Feb 10, 2024
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Comparison Chart

Purpose

Local transactions, guaranteed by issuing bank
Transferring funds between cities or countries
Sara Rehman
Feb 10, 2024

Withdrawal of Funds

Funds withdrawn immediately from customer's account
Amount paid upfront, then draft issued
Sara Rehman
Feb 10, 2024

Geographic Scope

Typically used within the same city
Suitable for long-distance transactions
Sara Rehman
Feb 10, 2024

Security

Considered very secure as backed by the bank
Secure, involves inter-bank transactions
Janet White
Feb 10, 2024

Typical Use

Often used in real estate, high-value purchases
Common for education fees, foreign transactions
Aimie Carlson
Feb 10, 2024
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Banker's Cheque and Demand Draft Definitions

Banker's Cheque

Funds are immediately taken from the issuer’s account.
The banker’s cheque was issued after deducting the amount from her account.
Janet White
Jan 25, 2024

Demand Draft

A preferred method for educational and foreign transactions.
Her university fees were paid through a demand draft.
Janet White
Jan 25, 2024

Banker's Cheque

Used for secure transactions within the same city.
The real estate deal was finalized with a banker’s cheque.
Sara Rehman
Jan 25, 2024

Demand Draft

Used for secure transactions over distances.
They received a demand draft from a foreign client.
Aimie Carlson
Jan 25, 2024

Banker's Cheque

Common in high-value local transactions.
The artwork was purchased using a banker’s cheque.
Harlon Moss
Jan 25, 2024

Demand Draft

A negotiable instrument for transferring funds between banks.
He sent a demand draft for his son's tuition fees abroad.
Sara Rehman
Jan 25, 2024

Banker's Cheque

A safer alternative to personal cheques.
For the charity auction, they accepted a banker’s cheque.
Huma Saeed
Jan 25, 2024

Demand Draft

Involves payment upfront before issuance.
The demand draft was prepared after he paid the amount in cash.
Sara Rehman
Jan 25, 2024

Banker's Cheque

A cheque issued and guaranteed by a bank.
He provided a banker’s cheque for the down payment of his new car.
Sara Rehman
Jan 25, 2024

Demand Draft

Suitable for inter-city or international payments.
For her overseas purchase, she used a demand draft.
Sara Rehman
Jan 25, 2024

FAQs

Are banker’s cheques and demand drafts the same?

No, they serve similar but distinct purposes in financial transactions.
Harlon Moss
Feb 10, 2024

How secure is a banker’s cheque?

Very secure, as it's backed by the issuing bank.
Sara Rehman
Feb 10, 2024

How quickly are funds withdrawn for a banker’s cheque?

Funds are withdrawn immediately when the cheque is issued.
Harlon Moss
Feb 10, 2024

What is a demand draft?

A demand draft is a negotiable instrument for transferring money between banks.
Huma Saeed
Feb 10, 2024

What are banker’s cheques commonly used for?

They're often used for real estate and high-value local transactions.
Sara Rehman
Feb 10, 2024

What is a banker’s cheque?

It's a cheque issued and guaranteed by a bank for local transactions.
Sara Rehman
Feb 10, 2024

Can demand drafts be used internationally?

Yes, they're commonly used for international payments.
Sara Rehman
Feb 10, 2024

Can I cancel a banker’s cheque?

It's difficult but possible under certain conditions.
Janet White
Feb 10, 2024

Is a demand draft suitable for small transactions?

Not typically, as it's more suited for larger, especially long-distance, transactions.
Sara Rehman
Feb 10, 2024

What’s the process for getting a demand draft?

You pay the amount upfront, and the draft is issued to the recipient.
Sara Rehman
Feb 10, 2024

Is a banker’s cheque suitable for urgent transactions?

Yes, as it's a guaranteed form of payment.
Harlon Moss
Feb 10, 2024

Is a banker’s cheque the same as a cashier’s cheque?

Yes, they are essentially the same.
Janet White
Feb 10, 2024

Who can issue a demand draft?

Any bank can issue a demand draft.
Harlon Moss
Feb 10, 2024

Can a banker’s cheque bounce?

Very unlikely, since it’s backed by the bank's funds.
Sara Rehman
Feb 10, 2024

How long does it take to clear a demand draft?

It varies, but it usually takes a few days.
Sara Rehman
Feb 10, 2024

Are banker’s cheques accepted everywhere?

Mostly, within the issuing city or country.
Harlon Moss
Feb 10, 2024

What fees are associated with a demand draft?

There are nominal issuance and handling fees.
Aimie Carlson
Feb 10, 2024

What if a banker’s cheque is lost?

Report immediately to the bank; they may issue a stop-payment and a new cheque.
Janet White
Feb 10, 2024

Can a demand draft be issued in foreign currency?

Yes, it's commonly used for foreign currency transactions.
Sara Rehman
Feb 10, 2024

How long is a demand draft valid?

Typically valid for 3 to 6 months, depending on the issuing bank’s policy.
Sara Rehman
Feb 10, 2024
About Author
Written by
Sara Rehman
Sara Rehman is a seasoned writer and editor with extensive experience at Difference Wiki. Holding a Master's degree in Information Technology, she combines her academic prowess with her passion for writing to deliver insightful and well-researched content.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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