DEFINITION of 'Foreign Draft'

An alternative to foreign currency. A foreign draft is a bank draft which is drawn on a financial institution in the country of currency. They can be purchased at commercial banks and usually have a fee depending on the institution and the type of account you hold.

BREAKING DOWN 'Foreign Draft'

Foreign drafts are generally used to send money to a foreign country. This method is cheaper and safer than sending the currency itself. It also enables the receiver to access the funds quicker than if a draft or check were written in U.S. currency. Further, it is less expensive and requires less information (such as the routing transit number) on the purchasers part than a wire transfer.

RELATED TERMS
  1. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  2. Treasurer's Draft

    A type of bank draft that is payable through a designated bank. ...
  3. Acceptance

    A contractual agreement on a time draft or sight draft to pay ...
  4. Sight Draft

    A type of bill of exchange, in which the exporter holds the title ...
  5. Nonpar Item

    A check, draft or negotiable instrument that a paying bank honors ...
  6. China's State Administration Of ...

    China's foreign exchange regulatory agency, which functions as ...
Related Articles
  1. Personal Finance

    What's a Bank Draft?

    A bank draft is a type of check. The bank guarantees payment, making it a more attractive option for the check recipient.
  2. Investing

    Should You Open A Foreign Savings Account?

    Would opening a savings account in a foreign bank make sense for you? The pros and cons, how to establish one – and alternatives to consider.
  3. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  4. Personal Finance

    Banker's Acceptance 101

    A banker's acceptance, a common way of financing international trade activity, provides a relatively safe, short-term vehicle for investors. An acceptance is a negotiable time draft that a bank ...
  5. Investing

    Why Countries Keep Reserve Currency

    Central banks and financial institutions hold large amounts of foreign money as their reserve currency.
  6. Investing

    Explaining Foreign Exchange Risk

    Foreign exchange risk is the chance that an investment’s value will decrease due to changes in currency exchange rates.
  7. Investing

    Broadening Your Portfolio's Borders

    Find out what type of international fund might suit your needs in gaining exposure to foreign markets.
  8. Trading

    6 Factors That Influence Exchange Rates

    An in depth look at out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  9. Managing Wealth

    What Taxes Do I Owe On Retirement Accounts Abroad?

    If you're a U.S. retiree, but previously worked abroad, here's what you need to know about taxes on foreign pensions and retirement accounts.
  10. Investing

    Investing Beyond Your Borders

    Investing abroad poses risks, but can also help you diversify. Discover ways to invest in foreign stocks.
RELATED FAQS
  1. How can I cancel a bank draft that I have purchased?

    Learn about what a bank draft is and how it works, the circumstances under which a bank draft may be cancelled, and what ... Read Answer >>
  2. What is foreign exchange?

    Foreign exchange, or Forex, is the conversion of one country's currency into that of another. In a free economy, a country's ... Read Answer >>
  3. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  4. How do businesses decide whether to do FDI via green field investments or acquisitions?

    When businesses decide to expand their operations to another country, one of the more important dilemmas they can face is ... Read Answer >>
Hot Definitions
  1. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  2. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  3. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  4. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  5. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
  6. Inflation

    The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of ...
Trading Center