What is a Bankers Draft or Cashiers Cheque?

A Bankers Draft or Cashiers Cheque is an official cheque issued by a bank, which means the funds are guaranteed by the bank itself. When someone purchases a Bankers Draft, the bank takes the funds from the purchaser’s account and puts them on hold. The bank then issues a cheque drawn on its own funds, which provides a higher level of security for the recipient since it ensures that the payment will not bounce due to insufficient funds.

This type of cheque is often used in transactions where large amounts of money are involved or where the seller requires payment assurance before delivering goods or services. Because it's backed by the bank, it carries more weight than a personal cheque, which depends on the account holder's available balance.

The other choices do not accurately define a Bankers Draft or Cashiers Cheque, as they either describe personal cheques, which lack the guarantee from a financial institution, or make claims about being able to cash it only at the issuing bank, which isn't a defining feature of a CK or Bankers Draft.