Certified Cheques

A personal cheque that has been accepted by a bank in advance of payment is known as a certified cheque. At the time of certification, the bank draws sufficient funds from the depositor’s account and sets them aside in a special account to pay the cheque when it is presented. In addition, the bank marks the front of the cheque with “accepted” or “certified”, the date, and the bank’s signature.

Cashier’s Cheques

A cheque that a bank draws on itself and which is issued by an authorized bank officer is a cashier’s cheque. Such cheques are used by banks to pay their own obligations. They also may be purchased from a bank by persons who wish to send remittances (payments) but who either have no personal chequeing account or do not wish to use their personal cheques.

Bank Drafts

A draft drawn by a bank on funds that it has on deposit with another bank is a bank draft. Thus, such a document is a draft drawn by one bank on a second bank. Banks use these drafts in their own transactions. If the seller refuses to accept cheques of customers whose credit is not established he or she may use bank drafts purchased from a bank.

Money Orders

Money orders are often used by persons who do not have chequeing accounts. A money order is a draft issued by a post office, bank, express company, or telegraph company for use in making payment or transferring funds upon the credit of the user. Money orders serve the same purpose as cheques.