Bank drafts

PaulHughesWH

Forgive my innocence, but could someone fill me in on bank drafts? Let's say I wanted to purchase something via bank draft - is it always necessary to pay a company by bank draft via post, or does procedure exist by which the bank transfers an amount to the company I am paying? Just to speed up the transaction?

Your help would be appreciated...

Zaph

A bank draft is essentially a cheque. You go into the bank and tell them you want a draft for x amount and they charge you that amount plus commission for the draft, which they make payable to the company you want to pay. It's like them using their own chequebook to write a cheque on your behalf.

Companies will often prefer bank drafts to personal cheques if the amount involved is large, as they know there's no chance of it bouncing.

lomb

if the draft gets lost in the post or u lose it ur screwed. will take 6 years to recover the money.

Zaph

If you lose the draft you just contact the bank and they will cncel it, exactly the same way that they would if you lost one of your own cheques. If it's lost in the post that's harder to know as you'll only find out when the company tells you that they still haven't been paid. Once they do this again the bank can cancel the draft and reissue a new one.

PaulHughesWH

Is there no way an immediate transfer of money could be arranged as a method of payment, to save delays?

Zaph

If you have all the bank account details for the person or company you wish to pay, that can be done fairly easily. Even better if they're in the Eurozone and have an IBAN number as this will mean that you pay much lower transfer charges.

lomb

im afraid the draft cannot be cancelled without the phsical draft. a couple sold their house here and were sent a draft by aib for cancelleation of the morgatge proceeds. the draft got lost. to cut a long story short aib told them to wait 6 years. that is the law here im afraid. the drafts are gauranteed. i would think twice b4 issuing a draft to anyone for a significant amount on theo off chance its lost.

PaulHughesWH

zaph wrote:

If you have all the bank account details for the person or company you wish to pay, that can be done fairly easily. Even better if they're in the Eurozone and have an IBAN number as this will mean that you pay much lower transfer charges.

So this happens, and is commonplace?

Zaph

It's how most transactions are done these days. The volume of cheques and bank drafts is a fraction of what it was 10 years ago. Go and talk to the people at your bank and they'll be able to tell you what you need to do, although they'll be able to do nothing for you unless you have the bank details of whoever it is you want to pay.

Regarding lost bank drafts, don't mind Lomb's scaremongering. There was a case recently in the papers about some couple who had a dispute with their bank over a lost bank draft, but I vaguely remember that there wqere specific circumstances in their case. A bank draft, like a regular cheque, is only valid for 6 months after the date of issue, and like a cheque it can be cancelled and replaced by the issuing bank. Most house deposits are paid by bank draft and are for significant amounts of money and as yet there hasn't been a collapse of civilisation due to lost drafts.

lomb

it is irish law im afraid, that u have to wait 6 years. until the law is changed if u lose it u have to wait 6 years. this does not apply in the uk.
my advice is ask ur bank to confirm or deny it. i gaurantee this is accurate.

BuffyBot

News to me, I must say

lomb

i asked the lady the other day in AIB and she confirmed that bank drafts were valid for much more than 6 months. the goverment introduced a law some time ago that drafts were to be gauranteed at all costs. no point in having a draft if someone cancels it...... therefore if the draft is lost one must wait 6 years to claim loss of it and this is assuming the draft is never presented by the named party or someone who has a similar name.
it is very worrying no doubt about it....
the other thing is the draft can be cancelled if u actually have the physical draft and wish for it to be cancelled . this is no problem at a small fee.
the final twist in this is if u register a draft which u definately should do and an post loses it u can only claim the issuing fee of £2 as it is only a documentary instrument.
if u dont believe me on the above i suggest u contact someone other than a cashier in a bank who can confirm all of the above.
oh and the special circum,stance referred to above was AIB posted the cheque registered and they lost it! then aib refussed to pay the couple blaming the courier company for negligence. the courier company agreet to pay 1800 for the loss value.
in the end aib agreed to loan half the money interest free to the couple for 6 years, with the balance payable after 6 years assuming the draft wasnt presented. funny story and shocking at the same time i think it was 200000.