how does a letter of credit work 
often in international trade a letter of credit is used to signify that a payment will be made to the seller on time and in full as guaranteed by a bank or financial institution after sending a letter of credit the bank will charge a fee typically a percentage of the letter of credit in addition to requiring collateral from the buyer among the various types of letters of credit are a revolving letter of credit a commercial letter of credit and a confirmed letter of credit 