Money Order vs. Bank Draft — What's the Difference?
Edited by Tayyaba Rehman — By Fiza Rafique — Published on December 3, 2023
Money Order is a prepaid payment method issued by institutions, while a Bank Draft is a payment order issued by a bank guaranteeing the payee a set amount.
Difference Between Money Order and Bank Draft
Table of Contents
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Key Differences
Money Order and Bank Draft are both instruments used to facilitate payments, but they function quite differently. A Money Order is essentially a prepaid voucher purchased from a post office, bank, or retail store, guaranteeing the payment of a specified amount to a designated recipient. On the other hand, a Bank Draft is a check drawn by a bank against its own funds, ensuring that the amount will be paid.
While both Money Order and Bank Draft provide secure payment methods, their availability and usage differ. Money Orders can be easily acquired by anyone, making them popular for sending money without a bank account. Bank Drafts, however, are available only through banks or credit unions and require the buyer to have sufficient funds in their account or a pre-arranged line of credit.
The level of security associated with a Money Order and a Bank Draft also differs. Money Orders can be lost or stolen, and while they can be replaced, the process might be time-consuming. Bank Drafts offer a higher degree of safety since they are drawn on and guaranteed by the bank's own funds.
In terms of international transactions, Money Orders and Bank Drafts also have their unique positions. Money Orders can be used for domestic and some international payments, often being favored for their simplicity. Bank Drafts, on the other hand, are commonly utilized for larger international transactions because of the credibility attached to them due to bank backing.
Comparison Chart
Issued By
Post offices, banks, retail stores
Banks or credit unions
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Availability
Easily available to anyone
Requires a bank account or line of credit
Security
Can be lost or stolen; replaceable
Higher security as it's bank-backed
Use
Domestic and some international payments
Commonly used for large international transactions
Backing
Prepaid by the purchaser
Drawn against bank's own funds
Compare with Definitions
Money Order
A prepaid voucher ensuring payment of a specific amount.
She sent a $100 Money Order to pay her monthly bill.
Bank Draft
Offers higher security than many other payment forms.
For high-ticket items, sellers often request a Bank Draft.
Money Order
Used for both domestic and limited international transactions.
She sent a Money Order overseas as a birthday gift.
Bank Draft
A check drawn by a bank on its own funds.
The car dealer preferred a Bank Draft over a personal check.
Money Order
Provides a receipt as proof of payment.
Keep the stub from your Money Order as a proof of payment.
Bank Draft
Guaranteed payment method backed by a bank.
For their peace of mind, they requested payment via Bank Draft.
Money Order
An alternative to checks for those without bank accounts.
Without a checking account, he used a Money Order to pay his rent.
Bank Draft
Commonly used for larger transactions or international dealings.
The overseas supplier only accepted payments through Bank Draft.
Money Order
Purchased from post offices, banks, or retail stores.
I bought a Money Order from the local post office to pay for my purchase.
Bank Draft
Requires the purchaser to have funds or a credit line.
Before getting a Bank Draft, ensure your account has sufficient balance.
Common Curiosities
Where can I purchase a Money Order?
Money Orders can be purchased at post offices, banks, or retail stores.
Is a Bank Draft safer than a personal check?
Yes, since a Bank Draft is drawn on and guaranteed by a bank's funds.
What's the primary difference between a Money Order and a Bank Draft?
A Money Order is prepaid, while a Bank Draft is a check backed by bank funds.
Can I use a Money Order for international transactions?
Yes, but it's subject to the acceptance policies of the recipient's country.
How do I get a Bank Draft?
By requesting one from your bank or credit union, ensuring you have sufficient funds.
Can a Bank Draft be canceled?
It's challenging since it's backed by bank funds, but in some circumstances, it might be possible.
What if I lose my Money Order?
It can be replaced, but there might be a fee and a waiting period.
Which is faster: sending a Money Order or a Bank Draft?
Both take similar time frames, but delivery might vary based on method chosen.
Is there a maximum limit for Money Orders?
Yes, limits vary based on where it's purchased but often cap around $1,000.
Why would someone request a Bank Draft over a Money Order?
Bank Drafts are often seen as more secure, especially for larger amounts.
Can I stop payment on a Money Order?
Once it's cashed, no. If it's lost or stolen, you can request a replacement with proof of purchase.
Is a Bank Draft the same as a cashier's check?
They're similar, both being bank-backed, but might have different issuing criteria.
Are there fees associated with buying a Money Order?
Yes, fees vary by issuer but are typically minimal.
If I have a bank account, should I use a Money Order?
It depends on the need; bank checks or drafts might be more convenient for account holders.
How is the recipient assured of the authenticity of a Bank Draft?
The draft's bank backing lends it credibility and assurance.
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Written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
