Is a draft account a checking account
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A Share Draft account works much like a Checking Account. Show
A key difference between share-draft accounts and many checking accounts is that the former earns interest. Credit Unions pay interest and dividends on shares held by account holders. There is no minimum amount to open your share draft account. You can get easy access to your money by:
Overdraft fees, Insufficient Funds fees, or other fees may reduce the earnings on the accounts listed above. Our checking accounts meet the Basic Banking for Massachusetts guidelines. We call them Share Draft (Checking) accounts. We know what you’re thinking, but we want you to know… They’re better than the account you are using now. Share drafts at the Attleboro Municipal Employees Federal Credit Union are like a regular checking account with some important differences. In your share draft account, your dollars can earn dividends. All you have to do is maintain a low $100 minimum balance. We pay you dividends (interest) on the unused balance – just like your regular share account. When you open a share draft account , you’ll get a book of share drafts (checks) that gives you use of your funds anytime, anywhere. Each draft is filled out in the usual way to the payee, in the exact amount, dated, and signed by you. Money can be deposited into your share draft account through payroll deduction, direct deposit, mail, or teller window. When you write your check, you automatically make a copy of it for your own record. What a convenience! No more check stubs. Once each month, we’ll send you an account statement showing the number of each draft written, the amount and the date. Also, overdraft transfer options are available to provide back-up funds when you are low. This service is free! There is no monthly service charge and no limit on the number of drafts you can write. There is no better way to manage your money than with a no-charge share draft account from the Attleboro Municipal Employees Federal Credit Union. Stop in and we’ll be happy to open your share draft account and give you more information. Once you receive a share draft account, you are eligible for an Attleboro Municipal Employees Federal Credit Union debit card. An instrument for making large payments without having to withdraw cash from one’s account What is a Bank Draft?A bank draft is a convenient and secure instrument for making large payments without having to withdraw cash from one’s account. Bank drafts are guaranteed by financial institutions and can be used by individuals to make payments to third parties. In most cases, bank drafts can be used to make payments in most currencies. The person receiving the bank draft can deposit it at any bank, just like cash. Bank drafts by most financial institutions do not expire. However, certain financial institutions may not accept bank drafts that are more than a few months old. Bank drafts are also commonly known as bankers’ drafts and bank checks. How Does It Work?First, the individual making the payment submits a request for a bank draft with their financial institution. Once the request is submitted, the bank reviews the individual’s account to see if he or she has sufficient funds to transfer. If the individual has sufficient funds, the bank approves the request, withdraws funds from the individual’s account, and issues a bank draft for an equivalent amount. The funds withdrawn from the individual’s account are generally transferred to the bank’s reserve account until the draft is presented for payment by the beneficiary. Bank drafts usually come with a small fee. However, most banking accounts offer a certain number of free bank drafts per year. The bank draft is issued in the form of a document and is drafted in the name of the individual who will be depositing it and receiving the money. The individual purchasing the bank draft is responsible for ensuring that the bank draft is delivered to the payee. Once the payee presents the bank draft for payment, his or her identity is verified with the name on the bank draft. After the identity verification process, the funds are deposited into the payee’s account. The funds can take anywhere between 1-4 business days to process. Can a Bank Draft be Canceled?A bank draft is difficult to cancel since the funds have already been withdrawn from the buyer’s account and transferred into the bank’s reserve account. However, if the bank can confirm that the bank draft has not been cashed out by the payee, it might agree to cancel the bank draft and refund the buyer’s account. If the bank draft gets destroyed or stolen before being delivered to the payee, the buyer can go to their bank to get a new draft and cancel the existing one. Similarly, if the transaction gets canceled for any reason, the buyer can request the bank to cancel the draft unless it has already been cashed out by the payee. What are the Advantages of a Bank Draft?1. Guaranteed availability of fundsUnlike a personal check, a bank draft is guaranteed by the bank. It means that the payee is guaranteed the availability of funds. In such a way, bank drafts are safer than personal checks, which might bounce if there are no sufficient funds in the payer’s account. 2. More convenientAnother advantage of a bank draft is that it is a much easier and more convenient method for transferring a large sum of money than withdrawing a large sum of cash. Unlike an e-transfer, a bank draft does not have a maximum amount limit and does not require the banking information of the payee. Thus, bank drafts are commonly used when making large purchases, such as buying a house or car. 3. Can be used for cross-border purchases and investmentsBank drafts can also provide funds in most currencies and are commonly used for cross-border purchases and investments in foreign countries. What are the Disadvantages of a Bank Draft?1. Cannot be canceled after deliverySince bank drafts represent a transaction that has already taken place, it cannot be canceled once it is delivered to the payee. 2. Subject to fraudAnother major disadvantage of a bank draft is that if it is lost, stolen, or altered with, and the funds are cashed out by the wrong person, the bank is not responsible for replacing the lost money. In such cases, the buyer can lose a lot of money, especially since bank drafts are generally used for larger purchases. Additional ResourcesThank you for reading CFI’s guide to Bank Draft. To keep learning and advancing your career, the additional CFI resources below will be useful:
Is a draft account checking or savings?A share-draft account is a version of a checking account, except it is offered by a credit union instead of a bank. In order to understand what a share-draft account is, it is first important to know the difference between a bank and a credit union.
What is an account draft?Draft account means an account upon which funds are withdrawn through a properly payable instrument or an electronic transaction.
What type of account is a checking?Checking account: A checking account offers easy access to your money for your daily transactional needs and helps keep your cash secure. Customers can typically use a debit card or checks to make purchases or pay bills. Accounts may have different options to help avoid the monthly service fee.
What is the difference between a share account and a share draft account?A share draft account is a liquid account at a credit union that allows you to make frequent withdrawals and payments. If you're familiar with checking accounts, share draft accounts are essentially the same. Again, the only difference is that a “share” account is at a credit union instead of a bank.
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