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

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

Though Intrater and his lawyers repeatedly requested the letter of credit, it never materialized.

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

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

He made ready for the journey, and set sail, disappointed, however, that the letter of credit did not come before he left.

From Famous American Statesmen by Bolton, Sarah Knowles