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.

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