letter of credit

American  

noun

1. an order issued by a banker allowing a person named to draw money to a specified amount from correspondents of the issuer.

2. an instrument issued by a banker authorizing a person named to make drafts upon the issuer up to an amount specified.

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letter of credit British  

noun

1. a letter issued by a bank entitling the bearer to draw funds up to a specified maximum from that bank or its agencies

2. a letter addressed by a bank instructing the addressee to allow the person named to draw a specified sum on the credit of the addressor bank

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Etymology

Origin of letter of credit

First recorded in 1635–45

Example Sentences

Twitter was then required to replenish the letter of credit by April 4, a deadline that it missed.

From Washington Times • Jun. 15, 2023

The letter of credit did not exist, the SEC would later tell a court.

From Seattle Times • Jan. 20, 2023

That individual could then travel to any city with a Venetian bank branch and redeem the letter of credit, which could then be spent on trade goods.

From Textbooks • Jan. 1, 2020

But she gave no details and would not confirm that the centerpiece of the negotiation was the $15 billion letter of credit.

From New York Times • Sep. 2, 2019

I was to take with me letters recommendatory to a number of his friends, besides the letter of credit to furnish me with the necessary money for purchasing the press, types, paper, &c.

From Memoirs of Benjamin Franklin; Written by Himself. [Vol. 1 of 2] With His Most Interesting Essays, Letters, and Miscellaneous Writings; Familiar, Moral, Political, Economical, and Philosophical by Franklin, Benjamin