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Bankers Drafts - can someone explain?


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Old 22-02-2009, 13:15
Polonius
 
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Hello people!



Can someone tell me what a Bankers Draft is, what it can be used for and how long it takes to clear?

Thanks!
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Old 22-02-2009, 13:20
Sigurd
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What are Bankers' Drafts?

Bankers' drafts are cheques drawn directly on the account of a bank rather than the account of a customer. The comfort they provide is that it is highly unlikely they would be returned unpaid due to lack of funds. However it is important to note that there is no guarantee against fraudulent use for example, they may be lost or stolen and then used fraudulently.
http://www.apacs.org.uk/payment_opti...ues_draft.html

The only time I've been given one (recently anyway) it took three or four working days to clear — much the same as a cheque.

If a customer wants a bankers' draft, he has to pay for it in advance, and no doubt a service charge will also be applied.
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Old 22-02-2009, 13:42
Rowdy
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A banker's draught is simply the bank's own cheque. It's generally thought to be as good as cash, because no bank will draw a fraudulent cheque.

In fact, if you think about it, there's not much difference between a banker's draught and a bank note - one is made out to an individual, the other is made out to "The Bearer".
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Old 22-02-2009, 13:43
Polonius
 
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So it's basically a cheque? My bank is writing me one tomorrow, and to cash it into another bank account will take days, like a cheque?
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Old 22-02-2009, 13:47
Rowdy
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So it's basically a cheque? My bank is writing me one tomorrow, and to cash it into another bank account will take days, like a cheque?
No, it's exactly a cheque. Drawn by a bank, against their own account. Hence "banker's draught".
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Old 22-02-2009, 14:25
Polonius
 
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So no faster than a cheque? Thanks.
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Old 22-02-2009, 14:33
Sigurd
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How long does a Bankers Draft take to clear?

A Bankers Draft will usually take around the same amount of time a regular cheque will take to clear, typically somewhere in the region of five working days.
http://www.shiredirect.com/mortgage-...aft.html#toc-4
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Old 22-02-2009, 15:22
Flossychick
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Please be warned that bankers drafts do not clear for 2 - 3 weeks, no matter what anyone else says.

My brother accepted a bankers draft for a TV he was selling and a ramdom stranger bought it with said bankers draft.

3 weeks later, after the TV was long gone, the bank returned the draft as unpaid and there was nothing my brother could do.

It is something to do with the fact that a personal cheque goes back and forth between the owners accounts. With a bankers draft it has to go back and forth to the bank it was issued and does not get checked within the personal accounts till much later on.

It is seen as safe cash but do not believe the hype. Accept a personal cheque and wait for it to clear for a least a week before handing any goods over or take the cash. Bankers drafts are stolen or coppied by these nigerian scammers as they take so long to check out.

I have also come across proffesional bank fraudsters who replicate the bankers drafts easily, again because they take so long to check out properly.

Please please please heed my warnings.
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Old 22-02-2009, 16:03
Yosemite
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Please be warned that bankers drafts do not clear for 2 - 3 weeks, no matter what anyone else says.

My brother accepted a bankers draft for a TV he was selling and a ramdom stranger bought it with said bankers draft.

3 weeks later, after the TV was long gone, the bank returned the draft as unpaid and there was nothing my brother could do.

It is something to do with the fact that a personal cheque goes back and forth between the owners accounts. With a bankers draft it has to go back and forth to the bank it was issued and does not get checked within the personal accounts till much later on.

It is seen as safe cash but do not believe the hype. Accept a personal cheque and wait for it to clear for a least a week before handing any goods over or take the cash. Bankers drafts are stolen or coppied by these nigerian scammers as they take so long to check out.

I have also come across proffesional bank fraudsters who replicate the bankers drafts easily, again because they take so long to check out properly.

Please please please heed my warnings.
Please don't.

This post is mostly misinformed nonsense, which in any case seems to bear no resemblance to the OP's situation.

See : http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=263&a=654

My bank is writing me one tomorrow, and to cash it into another bank account will take days, like a cheque?
If I understand your post correctly, this does beg the question of why they are issuing a bank draft (not 'draught') in the first place, if you are simply intending to pay it into another account in your name with a different bank.

A BACS transfer or bank giro credit would achieve this objective faster and save you the cost of the bank draft too (typically 10 minimum).
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Old 22-02-2009, 16:11
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2 -3 Weeks? ummm no, my bankers draft took a few days.
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Old 22-02-2009, 16:11
SkipTracer
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I always thought that a banker draft was as good as cash.

When I brought a new car year before last the salesman said if I used a banker draft that I could and indeed did drive the car straight out of the showroom.
The only difference from using cash was the bank charged me a tenner for it.
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Old 22-02-2009, 16:43
Sigurd
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There's sound information in the link that Yosemite gave:

If someone offers me a bank draft, what should I do?

Bank drafts are cheques drawn by a bank usually on its own Head Office. Payment is guaranteed provided the draft is genuine and has not been lost or stolen. If it is fraudulent or counterfeit it will not be paid.

Drafts go through the normal clearing process like any other cheque and if you are offered a bank draft in payment, don't release the goods until you are sure the draft is genuine and has been paid.

If you are selling a car or similar expensive item, beware of the ["buyer"] who turns up without notice after the banks have closed – usually a Friday. If the "buyer" offers a bank draft, already made out in your name for the full asking price and wants to take the item straight away (usually he/she says that they live at the other end of the country and are travelling back home that night or the next day), it is highly likely that you could be the potential victim of a fraud attempt.

Ask yourself whether the situation seems logical – would you for instance go to the trouble of getting a bank draft to buy an item without even checking its condition – or even whether it was still for sale? Better to have lost a sale rather than the item itself.
I assume that Flossychick's brother was simply given a forged bankers' draft.
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Old 22-02-2009, 16:51
TerraCanis
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I always thought that a banker draft was as good as cash.

When I brought a new car year before last the salesman said if I used a banker draft that I could and indeed did drive the car straight out of the showroom.
The only difference from using cash was the bank charged me a tenner for it.
That has also been my experience every time I'm bought a car. I went to the garage, exchanged keys, handed over the payment, and drove off the forecourt.

(Although as a recall it was referred to as a banker's draft on the first occasion only. On the others it was a withdrawal from a "building society" account made in the form of a cheque payable to the garage, and there was no additional fee).
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Old 22-02-2009, 17:02
cyberear
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I've used a debit card to buy a new car. No fee involved, and a lot less bother.
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Old 22-02-2009, 17:10
Sigurd
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I've used a debit card to buy a new car. No fee involved, and a lot less bother.
Likewise, though the car dealer did get a phone call from the bank and I was called to the phone to answer some security questions. That wasn't too challenging, but I hadn't expected it. Still, good to know that security measures were in place.

Another payment system that I was told by the lender to use when I was paying off my mortgage a few years back (hurrah!) was CHAPS:

CHAPS

CHAPS stands for Clearing House Automated Payments System.

It is a computer system, which allows payments to be made electronically. The payment goes from the paying bank to the receiving bank on the same day.
http://www.bba.org.uk/bba/jsp/polopo...?d=828&a=10329

I assume I must have paid a fee to use that system, but I can't remember what it was.
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Old 22-02-2009, 17:47
Yosemite
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Another payment system that I was told by the lender to use when I was paying off my mortgage a few years back (hurrah!) was CHAPS:

http://www.bba.org.uk/bba/jsp/polopo...?d=828&a=10329

I assume I must have paid a fee to use that system, but I can't remember what it was.
You would indeed have paid a fee - typically 25 minimum.
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Old 22-02-2009, 17:50
Sigurd
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You would indeed have paid a fee - typically 25 minimum.
Ah well, I was so overcome with relief at paying off my mortgage that I didn't care!
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Old 22-02-2009, 17:57
bubbsy
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Please be warned that bankers drafts do not clear for 2 - 3 weeks, no matter what anyone else says.
Rubbish, no matter what Flossychick says.

Since Nov 2007, the 2-4-6 agreement means that no cheque can be returned unpaid after 6 working days unless you are a known party to fraud. See http://www.chequeandcredit.co.uk/246/

Criminals will attempt to forge bankers drafts too, meaning they may look like a bankers draft, but aren't because they weren't actually drawn by the bank concerned. That's why they usually have to go through the same clearance cycle as a personal cheque.

To the OP: a bankers draft is a cheque drawn on the bank's suspense account rather than a customer's personal account. Funds are transferred from a customer's account to make the transaction. It's guaranteed cash if the cheque is genuine (as the funds were withdrawn from customer's account beforehand). A cheque drawn on a personal account isn't guaranteed cash as the funds have not yet been withdrawn.

Cheques are used less and less nowadays. Better to use the Faster Payment Service to transfer electronically if you can. Most banks allow up to 10,000 per day free of charge.
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Old 22-02-2009, 18:02
Yosemite
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Ah well, I was so overcome with relief at paying off my mortgage that I didn't care!
Happy days, eh ?

In fact, you probably had no choice, as pretty much all mortgage redemptions are completed this way. Interest is calculated to the proposed date of redemption and the lender requires cleared funds on that date to clear the account.
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Old 22-02-2009, 20:03
Polonius
 
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A BACS transfer or bank giro credit would achieve this objective faster and save you the cost of the bank draft too (typically 10 minimum).
I don't mind paying.

Yeah, basically it's in a Saver account at the moment and I want to transfer it to my current account (at another bank). I would like some of the money ASAP to make an investment though.

Halifax told me on the phone today they would issue a bankers draft, is that the only and fastest option?
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Old 22-02-2009, 20:58
Flossychick
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Ok I missed the point about the OPs bank to bank draft. it is a Sunday and am still blurry from partying last night.

If the bank are issuing the draft to you to take to another bank then of course it is fine but why dont they do a simple 24 hour bank transfer.

With my brother, the draft cleared in a few days but it was after 3 weeks that they pulled the money back out of his account. Obviously his was forged.

I am merely getting the point accross that there are many forged and stolen bankers drafts out there and do not accept one off a stranger. That is definately good advice.
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Old 22-02-2009, 21:00
Flossychick
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Did you also know that you can deny any over the phone credit card transaction for up to 2 years. This is why my company wont take cards over the phone. One for the crooks and food for thought
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Old 22-02-2009, 21:18
Cruachan
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Did you also know that you can deny any over the phone credit card transaction for up to 2 years. This is why my company wont take cards over the phone. One for the crooks and food for thought
Do you mean that one can "deny" them for two years, after which time one has to pay them; or, that within two years of an "over the phone" (or "customer not present") card transaction appearing on one's statement, one can repudiate it?
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Old 22-02-2009, 21:24
susie-4964
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I've used a debit card to buy a new car. No fee involved, and a lot less bother.
It's dead exciting just handing over your card for 8000! EPOS is a wonderful thing. I'd only use a banker's draft now for a private transaction if the seller was nervous about personal cheques, and even then I'd be tempted just to pay cash, since the money has to be in the account anyway.
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Old 22-02-2009, 21:25
susie-4964
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Do you mean that one can "deny" them for two years, after which time one has to pay them; or, that within two years of an "over the phone" (or "customer not present") card transaction appearing on one's statement, one can repudiate it?
Sounds a bit odd, because if you query a transaction you've got to go through your bank, and they do spend quite a lot of time investigating these things, so they's surely find out if it was a fraudulent claim?
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