What is the difference between cheque and demand draft

The primary difference between a cheque and a demand draft lies in the issuer and the guarantee of payment. A cheque is issued by an individual account holder and carries a risk of "bouncing" if there are insufficient funds. In contrast, a demand draft is issued by a bank and is a prepaid instrument, meaning the bank guarantees the payment as the funds are collected upfront. Key differences include:

• Issuer: Cheques are issued by customers; demand drafts are issued by banks.
• Payment: Cheques are paid after presentation; demand drafts are prepaid.
• Dishonour: Cheques can be dishonoured (bounce); demand drafts cannot.
• Charges: Banks typically charge a fee for issuing demand drafts, whereas cheques are usually free.