Legal Definitions - rediscount

Definition: Rediscount is the process of discounting a negotiable instrument that has already been discounted by a bank. It can also refer to a negotiable instrument that has been discounted a second time.

Example: A company receives a $10,000 check from a customer, which they deposit into their bank account. The bank then discounts the check, giving the company $9,500. Later, the company needs more cash and decides to use the discounted check as collateral for a loan. The bank agrees to rediscount the check, giving the company an additional $9,000.

This example illustrates how a negotiable instrument (the check) can be discounted twice through the process of rediscounting.