Difference Between Cheque and Demand Draft (DD) – Simple Explanation (2026)
Cheque and Demand Draft are both paper-based payment instruments, but they work very differently. Here’s a clear, side-by-side explanation in simple terms.
Quick Summary
- Cheque: Issued by an account holder, payment depends on account balance
- Demand Draft: Issued by a bank, payment is already guaranteed
- Risk level: Cheque is riskier than DD
- Usage: DD is preferred for important or high-value payments
Cheque vs Demand Draft – Comparison Table
| Feature | Cheque | Demand Draft (DD) |
|---|---|---|
| Issued by | Account holder | Bank |
| Drawn on | Customer’s bank account | Bank’s own funds |
| Payment guarantee | Not guaranteed | Guaranteed |
| Risk of bounce | High | Very low |
| Signature required | Yes | No (bank signs) |
| Can be stopped | Yes | Usually no |
| Used for | Routine payments | Fees, deposits, official payments |
What Is a Cheque?
A cheque is a written order by an account holder asking the bank to pay a specific amount to a person or organisation.
Key Points
- Payment depends on available balance
- Can bounce due to insufficient funds or signature mismatch
- Commonly used for rent, bills, or personal payments
What Is a Demand Draft (DD)?
A Demand Draft is a prepaid instrument issued by a bank after receiving money in advance.
Key Points
- Amount is paid first, then DD is issued
- Bank guarantees the payment
- Used for college fees, government applications, and large transactions
When to Use Cheque vs Demand Draft
Use Cheque When:
- Paying someone you trust
- Payment is not urgent
- Amount is small or routine
Use Demand Draft When:
- Payment must be 100% secure
- Recipient requires guaranteed funds
- Paying institutions, colleges, or government offices
Charges & Validity
- Cheque: Usually free or low cost
- Demand Draft: Bank charges apply
- Validity:
- Cheque – typically 3 months
- DD – usually 3 months (may vary by bank)
FAQs
Q. Can a cheque be dishonoured?
A. Yes, due to insufficient balance, signature mismatch, or date issues.
Q. Can a demand draft bounce?
A. No, because the bank issues it after receiving the funds.
Q. Which is safer – cheque or DD?
A. Demand Draft is safer.
Security Tips
- Never sign blank cheques
- Keep DD receipt safe until confirmation
- Write correct payee name clearly
Conclusion
The main difference between a cheque and a demand draft is payment security. Cheques depend on the payer’s account balance, while Demand Drafts are bank-guaranteed. For important or high-value payments, DD is the safer option.
