Difference between Cheque and Demand Draft

What are the difference between Cheque and Demand Draft

Now Demand Draft (DD) is using more than cheque these days for job application, examination fees, college admission and many types of services etc. A cheque can be bounced if there is no enough money in the bank account but the demand draft is not bounced or rejected. All the vital information about this is following here.


What is Demand Draft or DD

This is a kind of pre-paid negotiable instrument issued by bank, The Negotiable Instrument means that it guarantees a certain amount of payment that is mentioning the payer's name. It can not be transferred to any other person in any situation. Both Demand Draft and Cheque are old and simple way of transferring money. The validity of any demand draft is usually three months from the date of issue of the instrument.

By the way, demand draft (DD) has been using very less today, but I want tell you that this is an easy and secure method of transferring money, and it is mostly used to deposit college Fees. In today's modern times, we have started doing online banking like NEFT, RTGS, Mobile Banking, but its usefulness has not ended.

There are many benefits to sending money from demand drafts.

(i) Often the demand draft payment does not fail, the beneficiary can get his/her sum by depositing the draft in the designated bank at the certain time.

(ii) Travelling with a lot of money using the demand draft can be avoided. This feature provides a good protection.

Difference between Cheque and Demand Draft

There are some fundamental differences in Demand draft and Cheque, which is very important to know this.

(i) The cheque is order for the bank, on which the signature of the cheque owner is mandatory whereas the demand draft is just for the transfer of money from one person or company to the other.

(ii) The cheque uses by the owner for himself or his beneficiary whereas the demand draft can be prepared for any specific person or company.

(iii) The cheque is issued by the bank but its owner using and issues it, whereas the demand draft is operated by the bank.

(iii) There is no need to pay extra charges for the use of the cheque, but for the issue of demand draft different banks charge different fees.

(iv) Cheque gets bounced if no enough money in the bank account and the beneficiary does not get the money and on the other hand, through the demand draft beneficiary directly get the money because its a pre-paid instrument.

(v) The money of demand draft (DD) is transferred directly to the same account in the name of the person or company of the demand draft (DD). The cheque can be deposited in the account, as well as the money can be withdrawn from the cheque by the bearer.

(vi) To make a Demand Draft (DD), it is not necessary to have an account in your bank. While it is necessary to have an account in the bank for the cheque. 

(vii) You can make a Demand Draft (DD) by cash or you can deduct money from your account after forming a demand draft from the bank where you have an account. While it is necessary to have a bank account to give a cheque, you can also give a cheque to anyone when there is no money in your account like you can issue post-dated cheque.

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