letter of credit

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

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

Word History and Origins

Origin of letter of credit¹

First recorded in 1635–45

Example Sentences

A lawyer for James, Dennis Fan, in response called Trump's filing "procedurally improper" and argued Trump has not explained why he can't post his real estate or obtain a letter of credit.

From Salon

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

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

From Washington Times

Lefkowitz said the Education Department probably would request any new owner provide a letter of credit from a bank to help protect students and taxpayers if the school is unable to cover federal student aid liabilities — and that could give lenders pause.

From Washington Post

Twitter, which has had a lease for three floors in the building since 2011, had fallen behind on a similar amount of rent in December, which Sri Nine Market Square recouped from a letter of credit that Twitter had put up as a security deposit, the filing said.

From Seattle Times