Reply to: What is the point of a Banker's Draft?

[gothiclight]

i've just walked out of hsbc yesterday and they said i was not allowed to cancel one. "its their policy" to refuse in all instances, and they showed me it on the screen in their terms, which is bemusing as ive since seen linkson the net which say hsbc charge £10 for cancelling them...

my problem was i issued as bankers draft for $255 to go to the states, and the postal service lost it.... the postage was over £7 and the charge for issuing the draft was £20. It is covered by royal mail - though i have yet to try and get a refund from them (they require the origional reciept) ...


in the meantime - i am trying to review contract law on if i have paid for the services or not, as i don't have the funds to raise a new one, and its a fight over a domain name inter alia.

now i know from my contract law courses, that sending in a letter accepting an offer takes up the contract, even if that letter never arrives, so i am woundering what the case law is on - if you send a draft which can only be cashed by the recipient named above, can show at anytime, and can not be cancelled as per the banks stance. does it count as being paid for, at the time of postage...

as i could really do with knowing the case law before the end of the day, as i have a sneaky feeling it might

[Cyberman]

This person explains it as I undertand it, therefore I believe it isn't "as safe as cash"


http://www.consumeractiongroup.co.uk...conundrum.html

A personal cheque is a cheque drawn on a personal account. A bank draft is a cheque
drawn on the bank's account. To get one, you have to give them cleared funds first. Ie if you want a cheque from them for £1000, you must give them £1000-plus
their charge- I must say that £21 is a bit excessive- sure it's not £12?
So the cheque is virtually guaranteed not to bounce, unlike a personal cheque where you take pot luck. The banks say they are as good as cash. They are not.
They can be stopped just like a personal cheque-though you usually need a good reason. You have lost the draft, or you have a serious dispute with the person you gave the cheque to, for example. Drafts can also be forged and I know of instances where blank drafts have been stolen from a branch and then filled in for large amounts by the thief.
Why use them? Safety for one thing. Drafts are usually for fairly large amounts
[buying a car as an example]. If you get mugged with cash on you, you lose your cash:with a draft all you do is stop the cheque and get a replacement. Also much
easier to send it through the post than cash where the recipient will not accept a
personal cheque. It's a shame that just about the only bank that has a cheque
guarantee card for £1000 is the United bank of Kuwait.

Also if you accept a draft from someone, once you have exchanged your goods for it, do not let that person have access to the draft. There have been instances
where once they have your goods, they snatch the draft and tear it up then
claim they lost it and get their money back from the bank.

PS the reason that it takes 5 days to clear is that as it is still a cheque, it has to go through the same process as a
personal cheque [the bank clearing system]for it to be paid.

That concurs with what I said, if you read my posts. If you want to stop it then you have to have a very good reason. A bankers draft is a much stronger guarantee to the recipient than a normal cheque as the piece explains. A cheque can always be stopped but a bankers draft cannot. Whether it is as good as cash is purely playing with semantics, because cash can also be 'stopped' if it is forged, in that a bank will confiscate it and the recipient would thus similarly lose out.

[Bagpuss]

This person explains it as I undertand it, therefore I believe it isn't "as safe as cash"


http://www.consumeractiongroup.co.uk...conundrum.html

A personal cheque is a cheque drawn on a personal account. A bank draft is a cheque
drawn on the bank's account. To get one, you have to give them cleared funds first. Ie if you want a cheque from them for £1000, you must give them £1000-plus
their charge- I must say that £21 is a bit excessive- sure it's not £12?
So the cheque is virtually guaranteed not to bounce, unlike a personal cheque where you take pot luck. The banks say they are as good as cash. They are not.
They can be stopped just like a personal cheque-though you usually need a good reason. You have lost the draft, or you have a serious dispute with the person you gave the cheque to, for example. Drafts can also be forged and I know of instances where blank drafts have been stolen from a branch and then filled in for large amounts by the thief.
Why use them? Safety for one thing. Drafts are usually for fairly large amounts
[buying a car as an example]. If you get mugged with cash on you, you lose your cash:with a draft all you do is stop the cheque and get a replacement. Also much
easier to send it through the post than cash where the recipient will not accept a
personal cheque. It's a shame that just about the only bank that has a cheque
guarantee card for £1000 is the United bank of Kuwait.

Also if you accept a draft from someone, once you have exchanged your goods for it, do not let that person have access to the draft. There have been instances
where once they have your goods, they snatch the draft and tear it up then
claim they lost it and get their money back from the bank.

PS the reason that it takes 5 days to clear is that as it is still a cheque, it has to go through the same process as a
personal cheque [the bank clearing system]for it to be paid.

[Beefy198]

Only had to have one once (for a rent deposit on a house) and it was a right royal pain in the rear. My understanding was that they 'ring fenced' funds in your account but I could be wrong.

[Cyberman]

You can actually give someone a bankers draft, then cancel it at your bank so its pointless might aswell give someone a chq. I'd never accept a bankers draft from someone, or at least would wait till cleared funds until giving any good over...

I passed my AIB 30 years ago. so it may be that rules have changed, but certainly at that time you could not cancel a bankers draft. The whole idea of it is that it is meant to be as good as cash because it is drawn on a bank and not on you own account.
It is not normal that you can cancel a cheque drawn on somebody else's account. If you had lost it then of course the bank would not want a thief to use it, so it can obviously be stopped in that event as you are stopping potential fraud. If you have handed it over to a bona fide recipient, then you should not be able to stop it.

[Chugnut]

I sold my car privately a few years ago for 13k. I told the guy a bankers draft wouldn't allow him to drive away with it on the day so he intended to withdraw that amount from his bank and walk down the street to my bank to pay it in, watching over his shoulder in case I whacked him on the noggin and made off with the sack o' cash. <Cackle>

Fortunately, we both banked at Nationwide so they just did a direct transfer between accounts there and then.

Miss the car, but not the insurance.

[Ruprect]

You can actually give someone a bankers draft, then cancel it at your bank so its pointless might aswell give someone a chq. I'd never accept a bankers draft from someone, or at least would wait till cleared funds until giving any good over...

Yep - save yourself the £10 your issuer will charge you for the "cheque".

[NetwkSupport]

You can actually give someone a bankers draft, then cancel it at your bank so its pointless might aswell give someone a chq. I'd never accept a bankers draft from someone, or at least would wait till cleared funds until giving any good over...

[Cyberman]

When I last looked into it a bankers draft only guarantees the funds were in the account at the time it was drawn up. It is not as good as cash nor does the bank have to honour it.

You're obviously not an AIB graduate.

Bankers Drafts cannot be dishonoured unless forged and thus are as good as cash !!

[Bagpuss]

I remember selling a car a few years ago and the guy wanted to pay by a draft. I asked him to go with me to the bank, so we could check it was valid, to which he replied it was "as good as cash" but he would do it. At the bank the teller confirmed that it was genuine but also conformed it was not as good as cash as it could be stopped and only guarenteed the funds were available when it was drawn up, it could have been emptied since, or could be cancelled. Things may have changed in recent years then but I doubt it.

[BrianSnail]

I think wiki isn't quite right as usual...
Some banks will also allow you to stop them. They are effectively a cheque with a little bit more certainty. I'd never release anything until the money had cleared as fraudsters love them

Please refer to my earlier masterplan.

[Bagpuss]

I think wiki isn't quite right as usual...
Some banks will also allow you to stop them. They are effectively a cheque with a little bit more certainty. I'd never release anything until the money had cleared as fraudsters love them

[BrianSnail]

My friend the wiki says...

...when an individual requests a banker's draft they must immediately transfer the amount of the draft (plus any applicable fees and charges) from their own account to the bank's account. (An individual without an account at the issuing bank may request a banker's draft and pay for it in cash, subject to applicable anti-money laundering law and the bank's issuing policies.) Because the funds of a banker's draft have already been transferred they are proven to be available; unless the draft is a forgery or the bank issuing the draft goes out of business before the draft is deposited and cleared, the draft will be honoured. Like other types of cheques, a draft must still be cleared and so it will take several days for the funds to become available in the payee's account.

[Bagpuss]

When I last looked into it a bankers draft only guarantees the funds were in the account at the time it was drawn up. It is not as good as cash nor does the bank have to honour it.

[Cyberman]

"What is the point of a Banker's Draft? "

Its what you get when you leave the door open at Leahman Brothers...


...oh forget it