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. Demand Draft

    A method used by individuals to make transfer payments from one ...
  3. Time Draft

    A type of foreign check that is guaranteed by the issuing bank, ...
  4. Acceptance

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

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

    A check, draft or negotiable instrument that a paying bank honors ...
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. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  3. Investing

    Why Countries Keep Reserve Currency

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

    5 Ways To Invest In Currencies

    As the economies of some countries sputter and former third-world countries are beginning to emerge, currency investing is becoming more intriguing. Learn ways to make money on money with the ...
  6. Insights

    Europe Talks Tough on Brexit Deal in Leaked Documents

    The European Parliament wants its way on migrants, money, courts and, most importantly, time.
  7. 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.
  8. Insights

    Ever Wanted to Own International Stocks? Here's How

    Tips and strategies for users to trade in different exchanges around the world.
  9. Trading

    The Cheapest Ways To Get Your Currency Exchanged

    Travelers have a number of options when it comes to exchanging currency. Find out the cheapest way to exchange.
  10. Taxes

    Get A Tax Credit For Your Foreign Investments

    The foreign tax credit provides a break on investment income made and taxed in a foreign country.
RELATED FAQS
  1. What are some examples of a Foreign Institutional Investor (FII)?

    Discover some examples of foreign institutional investors, and learn information about the nature of foreign institutional ... 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 nations are actively recruiting FDI (foreign direct investments)?

    Understand the concept of foreign direct investments, and learn which countries most enthusiastically pursue investments ... 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 >>
  5. What are the advantages of foreign portfolio investment?

    Learn the advantages that businesses can derive from foreign portfolio investment in an increasingly globalized business ... Read Answer >>
Hot Definitions
  1. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  2. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  3. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  4. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  5. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
Trading Center