By MoneySense Editors on February 14, 2023

What is a bank draft?

By MoneySense Editors on February 14, 2023

Bank drafts are used to pay for large purchases like real estate or vehicles. Learn how bank drafts work and how to get one.

A bank draft is a physical form of payment that is guaranteed by a financial institution. Bank drafts are used for large purchases such as cars and real estate. To get a bank draft, you make a request to your bank, which will check your account to ensure you have enough funds. The bank then withdraws the money and moves it into a reserve account, where it sits until the recipient of your bank draft cashes it in.

Example: “Jon needed a bank draft to make a deposit on a new condo.”

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About MoneySense Editors

MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.