How can I cancel a bank draft that I have purchased?

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A:

It is usually not possible to cancel or stop payment on a bank draft since it, in effect, represents a transaction that has already occurred. However, if the draft has been lost, stolen or destroyed, it can usually be canceled or replaced as long as the purchaser has the required documentation.

Bank Drafts

A bank draft, also referred to as a bank check or cashier’s check, is a type of check that guarantees payment by the bank that issues the bank draft. It is typically used in any transaction where the buyer or seller wishes to guarantee payment of funds. Bank drafts are frequently used in international transactions.

A bank draft is obtained by a buyer, from his own bank, either by handing over cash or by having the bank deduct the amount of the draft from the buyer’s account. It is this fact that makes it difficult to cancel or stop payment on a bank draft, since the buyer has already paid out the funds that the draft represents.

There is typically a fee charged by the bank for a bank draft, which is not a personal or business check from the buyer’s checking account, but a check issued by the bank itself.

Canceling Bank Drafts

Since the buyer has already paid the funds to obtain the bank draft, the only means of effectively canceling the draft is to have the seller cash it and return the funds to the buyer.

However, if the draft has been lost, stolen or destroyed, the buyer may be able to cancel the draft by returning to his bank, explaining that the draft is irretrievable by either himself or the seller, and presenting to the bank the reference number or a printed copy of the draft.

As long as the bank can verify that the draft has not been cashed, it can cancel it and issue a new, replacement draft. It is a good idea to verify cancellation and replacement policies with an issuing bank.

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