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Letter of credit

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Letter of Credit Introduction What Is Credit?  Credit is generally defined as a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date— generally with interest. How Credit Works  In the first and most common definition of the term, credit refers to an agreement to purchase a good or service with the express promise to pay for it later. This is known as buying on credit. The most common form of buying on credit is via the use of credit cards. People tend to make purchases with credit cards because they may not have enough cash on hand to make the purchase. Accepting credit cards can help increase sales at retailers or between businesses.  The amount of money a consumer or business has available to borrow—or their creditworthiness—is also called credit. For example, someone may say, "He has great credit, so he's not worried about the bank rejecting his mortgage application."  Service credit is an agreement between a consumer and a service provider such as a utility, cell phone, or cable service.  In other cases, credit refers to a deduction in the amount one owes. For example, imagine someone owes their credit card company $1,000, but they return a purchase worth $300 to the store. They receive a credit on their account and then owe only $700. What is a Credit Letter  A Promise of future payment in cash OR KIND GIVEN IN EXCHANGE for goods or service is called credit. It is the inst ...
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