What Is an International Bank Draft?

An international bank draft solves a lot of problems when you want to pay important bills in a foreign country. Not everyone accepts personal checks since they carry the risk of insufficient funds and are usually written in the currency of your residence. When you buy an international bank draft, you put money on the counter -- or ask that it be taken from your account -- and the bank converts it immediately into whatever currency you specify.

Advantages of International Bank Drafts

Faster Deposits

Sending a bank draft in the payee's local currency has many advantages for the person receiving it. First, the money gets deposited into the account more quickly when it is in the country's currency. Depositing a check in U.S. dollars is possible in some foreign countries, but it takes much longer for the money to be received from the U.S. bank, be converted into the local currency and then hit the recipient's bank account.

Conversion Completed

Equally important, the currency exchange rate between countries is constantly changing, so using foreign currency checks can lead to exchange rate issues. Perhaps on the day you write a check for a specific dollar amount, it is converted into exactly the amount of euros, or other currency, required. However, the next day the exchange rate might be slightly more or less. And later, when a foreign currency exchange is done between banks, the amount may be significantly off. In international bank drafts, the U.S. money is converted into the foreign currency at the precise time the bank draft is purchased, so the person receiving the draft gets the full, current value.

No Risk of Bounced Checks

Last but hardly least, international bank drafts don't bounce like personal checks can. When you send a check drawn from a personal or business account, the other person will not get the funds unless your account has sufficient funds to cover it on the day the bank tries to clear it.

Disadvantages of International Bank Drafts

An international bank draft is a physical check that must be placed in an envelope with appropriate international postage and sent on its way. In this technological age, sending things overseas via the post office -- snail mail -- seems very slow. The check usually takes many days to reach its recipient, and some people consider the process too long.

A faster way to accomplish the same thing is by international money transfer. This method transfers money swiftly from one bank account to another in a different country without having to use snail mail. As with international bank drafts, conversion of currency happens at the time the transfer is arranged, not at some later point.