The main difference between Money Order and Bank Draft is that a Money Order is a payment order for a pre-determined amount of money, and a Bank Draft is a payment mechanism that is issued by the bank on request of the person paying.
Money Order vs. Bank Draft
Money Order is a payment method that needs the payer to pay a stated amount of money head start and is considered as a secure method of payment as the amount made already pay in advance. On the other hand, a bank draft is a paycheck that is drawn on bank’s money or fund after it receives the equal amount from the emitter’s or issuer account, a bank draft also called a cashier’s check. Money orders can be created by any association; whereas, a bank draft issued or given out by a bank. Money orders can issue from licensed stores, postal outlets or post office, and even banks. The banks by itself credit or acclaim amount from the bank account when making the money order. Whereas bank draft handovers the payer or spender responsibility and concern from the payee or receiver to his bank, it can only issue from banks where the payer has a checking account. Cash used when acquiring a money order, and this is why a money order is more safe and secure than a bank draft. While a bank draft is a check drawn on bank money after acceptance the amount from the issuer’s account, for this reason, it is less secure.
What is a Money Order?
A money order is an official document, generally issued by an administration, government or banking organization that permits the specified payee to take cash on demand. A money order tasks such as a check, in that the somebody who acquired the money order may stop payment request. Money orders are well accepted and changed to cash and are commonly utilized by people who do not have access to a standard bank account. These mechanisms are a suitable and acceptable method of payment for small liabilities and debts, both personal and business, and can buy for a small cost of service from most organizations. The financing entities or certified body that issues the money order to the payer will have the payee’s name, the issuer’s name, and the amount of money that can cash. Money orders do not contain personal data, such as your checking account number and your bank account number or details. Money orders can also place or deposit into a bank account, for no charge. The money order can issue in one state and cash in another state. The receiver who takes the money order does not essentially have to go the same emitter that sold the money order. The receiver can have it cash out at a native bank or credit cooperative, but may not take the reserves all at once, liable on the organization’s policy. If the recipient has no account, cash out the money order at the issuer’s workplace is a good option. As so often, a money order can use as a medium to send money external country.
What is the Bank Draft?
A bank draft is a sum for a payer that is assured by the issuing bank. Normally, banks will analysis the bank draft requestor account to see if adequate funds are useful for the check to clear. After it confirms that enough funds are existing, the bank efficiently reserves the funds from the person’s account to be delivered when the bank draft employed. A draft guarantees the payee a safe procedure of payment. And the payer or customer bank account balance will be reduced by the money withdrawal from the account. Attaining a bank draft needs that the customer has already deposited or placed funds up to the check amount and relevant fees with the issuing or allotting bank. The bank forms a check to the recipient drawn on the bank’s account. The name of the client stated on the check, but the bank is the existence of making the payment. A bank assistant or officer signs the check. A bank draft purposes similar to a cashier check. A bank draft can require by a vender when he has no association with the consumer; a deal comprises a large sale price or the vender beliefs collecting sum may be hard. For example, a vender will need a bank draft when selling a home or a vehicle.
- A money order is a printed or paper record, like a check, utilized for making payments, and the bank draft is a mean of payment whose funds are assured by your financial establishment.
- The financial institution or authorized body issues the money order. On the other hand, in the case of a bank draft, the bank issues it.
- Some money orders require a signature. While for a bank draft, a signature not required.
- Money orders can also deposit into a bank account, for no fee; on the other hand, banks charge a lower fee for bank draft.
- A money order is much safe than a bank draft.
Money orders are also so much easier to get instead of bank drafts as it needs a payee to have an account with the bank, where it is issuing the draft. The main dissimilarity among the two is the amount of limit that can be issued. A money order has a little amount limit, although the amount in bank draft can be greater.