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

Admiration aside, Intrater wanted to know about his investment and a promised letter of credit that secured it.

From Seattle Times • Jan. 20, 2023

A letter of credit system that the central bank imposed on importers, an attempt to conserve dollars, had left everything from cars to chicken feed stuck in Egyptian ports.

From New York Times • Oct. 27, 2022

A letter of credit could be issued from one bank branch at a certain amount, redeemable only by the account owner.

From Textbooks • Jan. 1, 2020

It contained two enclosures; the one a note from his publishers, the other a letter of credit upon a great Roman banking-house.

From A Night on the Borders of the Black Forest by Edwards, Amelia Ann Blanford