GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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38% - Moderately

Letter of Credit


Synonyms:irrevocable letter of credit, revocable letter of credit
Acronyms &
abbreviations:
L/C
Filed Under: financial-banking, legal-contracts
Tags: banking, finance
 

Definition of letter of credit (L/C)

letter of credit (L/C)
1. A written letter that gives authorization to a person or company to draw on a bank or which states that the bank will honour the credit up to the stated amount.

Related Terms and Acronyms:

  • cheque (CK)   A written order for payment of a certain amount of money.
      ➥  Bank account transaction code.
  • credit   Money that a lender gives to a borrower on condition of repayment over a certain period.
  • credit card (CC)   A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
      ➥  A payment card that gives customers access to a revolving line of credit.
  • debit   Another name for withdrawal of funds from your account.
  • documentary credit   Written undertaking by a bank on behalf of an importer authorizing an exporter to draw drafts on the bank up to a specified amount under specific terms and conditions. They are used to facilitate international trade. In the United States these instruments are called commercial letters of credit.
  • irrevocable   Unalterable.
  • irrevocable beneficiary   A life insurance or segregated fund beneficiary whose benefit cannot be revoked or modified in any way without his or her consent.
  • loan   Letting another party use something of value temporarily.
  • revolving letter of credit (RLC)

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