Bank draft credit is a paper document used in the UK for transferring money between accounts. It contains more information than a check and is commonly used for utility bill payments. It was historically used for social security payments and was known as “the giro.”
A bank draft credit is a type of document used in the UK. It is used as part of a bank transfer process, along with a cherub or cash payment. The term is most commonly associated with an outdated form of welfare payment.
Bank draft credit is used for the paper equivalent of an electronic money transfer. It is not a payment instruction, but rather a piece of paper that contains the information needed to transfer money from one account to another. This document allows the payer or payee to provide more information than would be communicated on a paper check.
The most common form of draft credit in use today is on paper bills from utility companies. This appears as a slip at the bottom of the bill. The customer then returns this receipt by mail along with a check or takes it to a bank or post office to make a payment by check or cash.
This type of bank draft credit contains details not only of the payment amount due and the name of the utility company, as it would appear on a check, but also additional information such as the customer reference number for the company and, most Importantly, the bank’s sort code and account number for the account the company uses to receive payments. This has two purposes. First, it makes sure that the payment goes to the correct account. Second, it helps identify the paying customer in case of confusion.
The other main use of bank credit is better known as a payment receipt. This is found in the back of a checkbook or in a separate book of receipts to boot. These notes are pre-printed with the customer’s account details. The customer then gives this to the clerk when he pays cash or checks on his account, or includes it with the cash and checks in an envelope that is placed in a special drop box at the bank.
Historically, the giro credit was used for social security payments. Instead of the government handing out cash to recipients, it would send a “draft check” to the person receiving the welfare payment. The person would then take the draft check and proof of identity to a post office, where it would be exchanged for cash. The document, and the welfare payment itself, were known colloquially as “the giro.”
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