Guide to Bank Drafts: ACH, Online Payments, and Automatic Drafts
Understanding Bank Drafts: A Comprehensive Guide to ACH, Online Drafts, and More
When it comes to secure payments, bank drafts are one of the most reliable methods. Whether you’re making a large purchase, transferring funds, or automating recurring payments, a bank draft can be your go-to solution. In this guide, we’ll cover everything you need to know, including ACH bank drafts, bank drafts online, and automatic draft payments. Plus, we’ll discuss how Simplii Financial and Tangerine offer convenient options for bank drafts.
What is a Bank Draft?
A bank draft is a guaranteed payment method issued by a bank. Unlike a personal check, which could bounce if there aren’t enough funds, a bank draft is backed by the bank. This makes it a secure option for large payments like home purchases or business transactions.
Bank drafts remove the uncertainty, making them a safer option for both parties. The bank takes the specified amount from your account and guarantees that the payment will go through.
Benefits of Using a Bank Draft
Bank drafts are particularly useful when security and guaranteed payments are essential. Here are the key benefits:
- Guaranteed Payment: The funds are secured by the bank.
- Security: Reduces the risk of bounced payments or fraud.
- Convenience: Many banks allow you to request and manage drafts online.
Types of Bank Drafts
Traditional Bank Draft
A traditional bank draft is a physical document issued by the bank. You can either request one at your local branch or, increasingly, through online banking platforms like Simplii or Tangerine.
ACH Bank Draft
An ACH bank draft is an electronic transfer of funds via the Automated Clearing House (ACH) network. This type of draft is often used for direct deposits, recurring bill payments, or payroll. It’s a fully automated and digital process, making it quick and convenient.
Automatic Draft Payment
An automatic draft payment is when recurring payments are set up on a regular schedule. These are useful for bills like rent, utilities, or loans. Many banks allow you to automate your payments so you don’t have to worry about missed deadlines.
For more details on ACH drafts, you can check this ACH Network guide.
How to Deposit a Bank Draft Online
With the rise of digital banking, you no longer need to visit a physical branch to handle your bank drafts. Most banks, including Simplii and Tangerine, offer the option to deposit bank drafts online.
Steps to Deposit a Bank Draft Online:
- Log into Your Online Banking Platform: Whether it’s Simplii, Tangerine, or another bank, log in to your online or mobile app.
- Select the Deposit Option: Navigate to the “Deposit” section.
- Upload the Bank Draft: Take a clear picture of the draft and upload it following the bank’s instructions.
- Confirm and Submit: Review the details and confirm the deposit.
For more specific instructions, check out Simplii’s guide: Simplii Bank Draft Services.
Simplii Bank Draft and Tangerine Bank Draft
Both Simplii Financial and Tangerine are known for offering seamless online banking services, including bank drafts.
Simplii Bank Draft
The Simplii bank draft can be requested online or in-person, and it provides a convenient and secure way to make large payments. Simplii also allows users to set up automatic draft payments, giving you full control over your recurring transactions.
Explore Simplii’s bank draft options here: Simplii Financial.
Tangerine Bank Draft
Similar to Simplii, Tangerine offers a quick and easy way to obtain a bank draft. You can request a Tangerine bank draft through their online platform, saving you a trip to the branch. Their process is streamlined, ensuring that both individuals and businesses can manage payments efficiently.
For details on how to use their services, visit: Tangerine Bank.
How Bank Drafts Compare to Other Payment Methods
You may wonder how bank drafts stack up against other common payment options. Here’s a quick comparison:
- Bank Draft vs. Personal Check: A personal check can bounce if there are insufficient funds, whereas a bank draft is guaranteed by the bank.
- Bank Draft vs. Wire Transfer: While a wire transfer is instant and irreversible, a bank draft can take a couple of days to process. However, bank drafts tend to be less expensive than wire transfers.
- Bank Draft vs. ACH Draft: An ACH bank draft is fully electronic, ideal for automated payments, while a traditional bank draft is a physical document. ACH drafts are more suitable for regular, automated payments.
How to Set Up an Automatic Draft Payment
Setting up automatic draft payments can make managing bills much easier. Here’s how to do it with most banks:
- Log in to Your Online Account: Start by logging into your bank’s online platform, like Simplii or Tangerine.
- Navigate to the Payment Section: Find the section for setting up payments.
- Set the Frequency: Choose whether the payment should be made weekly, monthly, or quarterly.
- Enter the Details: Specify the amount and the account you wish to pay from.
- Confirm Setup: Double-check your details and confirm the automatic draft payment.
For more information, see Simplii’s step-by-step guide: How to Set Up Automatic Payments.
Common Questions About Bank Drafts (FAQ’s)
Can You Cancel a Bank Draft?
Once a bank draft is issued, it’s typically non-cancelable because the funds are guaranteed. However, if fraud is suspected, contact your bank immediately.
How Long Does It Take to Process a Bank Draft?
Processing times vary, but it generally takes 1 to 3 business days. For ACH drafts, the process is quicker, often completed within one business day.
Is There a Fee for Using a Bank Draft?
Most banks charge a fee for issuing a bank draft. Fees usually range from $5 to $10, depending on the bank. Simplii bank drafts, for instance, have a small fee, which you can find on their website.
If you’re looking for a secure way to make large payments, bank drafts, whether traditional or ACH bank drafts, offer a trusted solution. With online options from banks like Simplii and Tangerine, managing payments is easier than ever, whether it’s an automatic draft payment or a bank draft online.