Bank Draft vs Certified Cheque vs Money Order in Canada: Which One Should You Use?

When a personal cheque or e-transfer will not do, you may be asked to pay by bank draft, certified cheque or money order.

All three are paper payment instruments that offer the recipient more assurance than an ordinary personal cheque. However, they are issued differently, work best for different amounts and carry their own risks.

Here is how to choose the right option in Canada, whether you are buying a used vehicle, paying a government fee or sending money through the mail.

The quick answer

For most people, the choice comes down to the size and purpose of the payment:

• Use a bank draft for a large purchase when the recipient wants funds backed by a financial institution.
• Use a certified cheque when a business, lawyer or other recipient specifically asks for one.
• Use a money order for a smaller, fixed payment, especially if you do not have a chequing account or need to send payment by mail.

What is a bank draft?

A bank draft is a payment instrument issued by a bank or credit union. The institution takes the money from your account, or requires you to pay the amount upfront, and then issues a draft drawn on its own account.

That is the key difference between a bank draft and a personal cheque. The recipient is relying on the issuing financial institution’s funds rather than waiting to find out whether there is enough money in your personal account.

Bank drafts are commonly used for:

• Vehicle purchases
• Real estate transactions
• Large contractor payments
• Deposits on major purchases
• Private sales where the seller will not accept a personal cheque
• Certain legal or business payments

A bank draft is generally the most practical choice of the three for a large Canadian-dollar payment. Fees, maximum amounts and available currencies vary by financial institution and account package, so check before visiting a branch.

You will normally need the exact legal name of the person or organization receiving the payment. Confirm the spelling before the draft is prepared. Correcting a payee error may require the original draft to be cancelled and reissued.

What happens if a bank draft is lost?

Treat a bank draft much like cash.

Because the funds have already been taken from your account, replacing a lost, stolen or destroyed draft may not be quick. The financial institution may require identification, proof of purchase, an indemnity agreement and time to confirm that the original has not been cashed.

If a draft goes missing, contact the issuing institution immediately and keep your receipt. Do not assume the bank can simply place an instant stop payment on it.

What is a certified cheque?

A certified cheque starts as a personal cheque. Your financial institution confirms that sufficient funds are available, sets those funds aside and marks the cheque as certified.

The money still comes from your account, but the certification gives the recipient additional assurance that the funds were available when the cheque was issued.

Certified cheques may be used for:

• Legal transactions
• Security deposits
• Business payments
• Purchases where a contract specifically requires one

In practice, bank drafts have become more common for many large transactions. Some financial institutions may limit certified-cheque services or encourage customers to use a draft instead.

A certified cheque is usually worth choosing only when the recipient specifically requests it. Before paying a fee, ask whether a bank draft would also be accepted.

Certified cheques are also treated differently from ordinary personal cheques when it comes to stale dating. Regular cheques are generally considered stale after six months, but certified cheques are an exception, according to the Financial Consumer Agency of Canada.

What is a money order?

A money order is a prepaid payment for a specific amount. It can be purchased from Canada Post or, depending on the services available, from a financial institution.

Unlike a personal cheque, you do not need the recipient to trust that money will still be in your account later. You pay for the money order when it is issued.

Money orders can be useful for:

• Government applications and processing fees
• Smaller payments sent by mail
• Rent or other payments when personal cheques are not accepted
• People who do not have a chequing account
• Recipients who want a paper payment with funds paid upfront

Canada Post currently charges $8.50 per postal money order, with a maximum value of $999.99 per money order. It can be purchased using cash or debit, but not a credit card. There is no fee to cash a postal money order at a Canadian post office. These details can change, so confirm them on the Canada Post money order page before buying one.

Because of the $999.99 limit, a postal money order is generally not practical for large purchases. Buying several money orders also means paying the fee several times.

Keep the receipt and any reference number until the recipient confirms that the payment has been received and deposited.

Which one should you use?

Buying a used car

A bank draft is usually the strongest fit for a private vehicle purchase because it can cover a large amount and is issued by a financial institution.

If you are the seller, do not release the vehicle, keys or signed ownership documents based only on the appearance of the draft. If possible, meet the buyer at the issuing branch and verify the instrument with the bank.

Paying a lawyer or making a real estate payment

Follow the recipient’s instructions exactly. A lawyer, brokerage or other professional may require a bank draft payable to a particular trust account.

Confirm the payee name, deadline and accepted payment method before ordering anything. A mistake can delay a time-sensitive transaction.

Paying a small fee by mail

A money order may be the simplest option if the organization does not accept cards, e-transfers or personal cheques. Confirm the amount and payee name before purchasing it.

Paying someone who asks for a certified cheque

Ask whether a bank draft is also acceptable. If the recipient insists on a certified cheque and your bank provides the service, follow the bank’s instructions.

Sending money internationally

Ask the recipient and your financial institution which currencies and instruments are accepted. Foreign drafts can involve additional fees and longer processing times.

For a large international payment, a wire transfer may be more practical and easier to trace than mailing a paper instrument.

A guaranteed payment can still be counterfeit

The funds behind a genuine bank draft, certified cheque or money order may be secured, but that does not mean every document presented to you is genuine.

Counterfeit and altered payment instruments exist. A fake draft can look convincing enough to be accepted for deposit before the fraud is discovered. If that happens, the deposit may later be reversed.

The Canadian Bankers Association recommends being cautious with unexpected cheques and monitoring your account after depositing one.

If you are receiving one of these payments:

• Inspect the document for alterations or spelling errors.
• Contact the issuing institution using a phone number you find independently.
• For a large local transaction, complete the exchange at a bank branch when possible.
• Do not accept a payment for more than the agreed price and send the difference back.
• Do not treat a photograph, scan or PDF as payment.
• Wait for proper verification before handing over valuable property.

The overpayment request is a common warning sign. A fraudster may send a counterfeit draft or money order for too much, then ask you to refund the difference before the original payment is rejected.

Can your bank place a hold on the deposit?

Yes. Your financial institution may hold funds when you deposit a bank draft, certified cheque or money order.

According to the Financial Consumer Agency of Canada, cheque deposits may be subject to holding periods. The exact period can depend on the amount, how the deposit was made and the institution’s policies.

A hold ending does not necessarily prove that an instrument is authentic. If you are unsure about a large payment, ask your bank what verification has been completed before spending the money or transferring property.

Some institutions may allow mobile deposit of bank drafts, certified cheques and money orders. You must deposit the original instrument, not a photocopy or printout. Eligibility depends on your financial institution.

Before you buy any of the three

Bring government-issued identification and make sure you know:

• The exact payment amount
• The recipient’s correct legal name
• The required currency
• The payment deadline
• Whether the recipient accepts that instrument
• The applicable purchase fee
• What identification or account access the issuer requires

If the payment is part of a larger purchase, include the cost in your Canooq budget. Newcomers who are still getting familiar with Canadian banking can also find practical information in Canooq’s New to Canada resources.

The bottom line

A bank draft is generally best for a large Canadian payment. A money order is better suited to smaller, fixed amounts. A certified cheque remains useful when a recipient specifically requires one, but it may be less convenient or less widely available.

Whichever option you choose, verify the payee details before it is issued and protect the original document. If you are receiving the payment, remember that institutional backing applies only to a genuine instrument. Verification still matters.

Information and fees were reviewed on August 29, 2026. Financial-institution policies may vary. This article provides general information and is not financial or legal advice.