what does a letter of credit cost 
banks typically charge a percentage of the amount of money they are guaranteeing for a letter of credit but the fee can also vary based on the applicant s creditworthiness a review of lender websites shows fees generally ranging from about 0 75 to 2 the bottom lineletters of credit are an important tool in business transactions between buyers and sellers especially if the parties are in different countries or have not had a long relationship and built up trust transferable letters assure both sellers and their suppliers that they will be paid for their goods and services if they deliver as promised buyers must pay for letters of credit but they often facilitate deals that wouldn t be possible otherwise 