letter of credit

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Related to Commercial letters of credit: Revocable letter of credit, Irrevocable Letters of Credit

credit, letter of,

commercial instrument through which a bank or other financial institution instructs a correspondent institution to advance a specified sum of money to the bearer. The document is called a circular letter of credit when it is not addressed to any particular correspondent. In effect, a letter of credit is a draftdraft,
in banking, order by one party to another party to pay a stated sum to the person or firm in whose favor the draft is made. It is similar in form to the ordinary bank check. Often the drawer and the drawee of a draft are the same person.
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, save that the amount is merely stated as a maximum not to be exceeded. Letters of credit, mainly used by travelers, greatly simplify nonlocal business transactions. Those who issue such letters are usually so well known that any bank will honor the letter upon proper identification. Travelers' checks are a modified form of a letter of credit. They are issued in coupons, upon whose face a value is usually expressed in terms of the currency of a particular country. In the United States they are issued by express companies and banks. Circular letters of credit require that each payment, as it is made, be endorsed by the firm making payment so that other banks may know how much of the total credit has been used.

letter of credit:

see credit, letter ofcredit, letter of,
commercial instrument through which a bank or other financial institution instructs a correspondent institution to advance a specified sum of money to the bearer.
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References in periodicals archive ?
Barnett offers its international customers a variety of commercial credit products, such as export financing, commercial letters of credit and bankers acceptances, as well as collection products to accelerate a company's collection and deposit of customer remittances.
Using TradeCard, Dime's business customers will be able to initiate, conduct and settle international trade transactions online, 24 hours a day, seven days a week, without using the traditional and more costly paper-based vehicle of commercial letters of credit.
Approximately $12 million of the senior credit facility will be used to support commercial letters of credit, and the remainder will be used to provide working capital and for other purposes.
The funds are available for working capital and general corporate purposes, with sublimits for standby and commercial letters of credit.
Imperial Bank is ranked among the nation's top 50 banks in terms of International Commercial Letters of Credit volume.

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