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.

---

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

---

Etymology

Origin of letter of credit

First recorded in 1635–45

---

Example Sentences

See Examples For:

letter of credit

Although ISL’s 2001 bankruptcy exposed the risk of relying on a single partner, the ATP survived because Miles and Scott had secured a $200 million Swiss letter of credit.

From Los Angeles Times ● Sep. 9, 2026

The lending to the units is backed by a letter of credit from another bank, according to filings in bankruptcy court in Houston.

From The Wall Street Journal ● Nov. 19, 2025

In March, to make up for the lost payments, the landlord used a letter of credit deposited by Twitter for $968,000.

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

No one, he said, who knew the Governor, trusted him in the slightest degree, and, as for his giving a letter of credit to Benjamin, he had no credit to give.

From Benjamin Franklin; Self-Revealed, Volume II (of 2) A Biographical and Critical Study Based Mainly on his own Writings by Wiliam Cabell Bruce

Random Word

Spin the wheel and learn a new word!

---