- SIGHT/USANCE L/C: Letters of credit can permit the beneficiary to be paid immediately upon presentation of specified documents (sight letter of credit), or at a future date as established in the term/usance letter of credit.
- CONFIRMED L/C: Confirmed letter of credit is an arrangement where a confirming bank adds its undertaking in addition to that of issuing bank to honor a complying presentation. It is an irrevocable undertaking issued by another bank/entity.
- REVOLVING L/C: In order to avoid credit that has been partially utilized, a revolving credit may be used for the value of the credit to be restored.
- TRANSFERABLE L/C: In this type of letter of credit, the seller is allowed to transfer the credit either fully or partially to one or more parties provided the L/C clearly states that it is a transferable letter of credit, also the L/C cannot be transferred by the second beneficiary to a subsequent beneficiary.
- BACK-TO-BACK L/C: A back-to-back letter of credit involves two letters of credit to secure financing for a single transaction. These are usually used in a transaction involving an intermediary between the buyer and seller. Back-to-back letters of credit are used primarily in international transactions.
