LC Cost Calculator
Estimate total bank charges on a Letter of Credit including issuance, confirmation, negotiation, and usance interest. Built for exporters and importers to model net realisation per UCP 600 rules.
A standard sight LC for USD 500,000 at 90 days typically costs USD 2,000–2,500 all-in: issuance (~1% p.a. pro-rated = ~USD 1,250), negotiation (0.15% = USD 750), and advising/SWIFT/courier flat fees (~USD 175). Add USD 375–1,000 if confirmation is required.
This calculator covers all bank fee types - issuance, confirmation, negotiation, advising, SWIFT/courier, amendments, discrepancies, and usance discounting - and applies the correct ACT/360 (USD/EUR/AED) or ACT/365 (GBP/INR) day-count automatically. Results are shareable via URL. See the full LC cost guide or check how LCs work.
| Line item | Basis | Amount |
|---|---|---|
| Issuance Commission | 1% p.a. × 90d (ACT/360) | $1,250.00 |
| Negotiation Fee | 0.15% | $750.00 |
| Advising Fee | Flat | $100.00 |
| SWIFT + Courier | Flat | $75.00 |
| Total | $2,175.00 |
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UCP 600 Compliance Matrix
Overview & methodology
How banks charge for Letters of Credit
LC costs split between the applicant (buyer) and the beneficiary (seller) per Field 71B of the SWIFT MT700. Issuance and reimbursement fees are charged to the applicant; negotiation, confirmation and discrepancy fees typically fall on the beneficiary. Always reconcile Field 71B with your commercial agreement before opening the LC.
How much does confirmation add?
Confirmation rates range from 0.1% p.a. (top-rated issuing bank in a low-risk country) to 2.0% p.a. (sub-investment-grade issuing country). On a USD 500,000 sight LC for 90 days, confirmation adds USD 375–1,000 to the total cost. Whether confirmation is worth it depends on the issuing bank's credit rating, country transfer risk and your tolerance for bank insolvency risk.
Numerical Example: Sight LC Cost Comparison ($500,000)
Confirmation adds significant cost but protects the seller against issuing bank insolvency or country risk.
Fee breakdown by charge type
- Issuance: 0.125%–0.5% per quarter or part thereof, charged by the issuing bank to the applicant.
- Confirmation: 0.1%–2.0% p.a., varies by country risk and issuing bank tier.
- Negotiation: Usually 0.125%–0.15% with a minimum (e.g. USD 100).
- Advising: Flat USD 50–150 at the advising bank.
- Discrepancy fee: USD 75–150 per discrepant presentation set. Use the LC Discrepancy Auto-Scanner before presenting to avoid this charge.
Numerical Example: US$ 500,000 Sight LC (90 Days)
A typical sight letter of credit transaction for $500k with standard bank fee tiers. Excludes confirmation or discrepancy charges.
Day-count conventions
Annual-rate charges are pro-rated on the money-market convention for the LC currency: ACT/360 for USD, EUR and AED; ACT/365 for GBP and INR. Switching currency in this tool automatically switches the basis.
ICC article references
UCP 600 Article 8 (confirming bank undertaking), Article 14 (standard for examination), Article 16 (discrepant documents and notice), Article 28 (insurance documents), Article 30 (tolerances in credit amount, quantity and unit prices). For usance interest calculations, see the Usance LC Interest Calculator.
Frequently asked questions
How do I calculate letter of credit charges?
Sum the issuance fee (typically 0.125–0.25% per quarter of the credit amount), confirmation fee (0.15–0.4% per quarter if confirmed), advising, negotiation (0.1–0.2%), courier, reimbursement and discrepancy fees. Charges are pro-rated on the actual tenor using ACT/360 (USD/EUR/JPY) or ACT/365 (GBP/INR).
How much does a confirmed LC cost?
For a USD 500,000 confirmed sight LC with a 90-day tenor, expect USD 2,000–5,000 total: USD 625–1,250 issuance, USD 375–1,000 confirmation, USD 500–1,000 negotiation, plus courier and reimbursement (USD 250–500) and any discrepancy fees (USD 75–150 per set).
Who pays the LC charges?
Field 71B of the SWIFT MT700 assigns charges. Common structures: 'All charges outside issuing bank for beneficiary account' (exporter pays confirming/negotiating charges), 'All charges for applicant' (importer pays everything), or split. Always confirm 71B matches your commercial agreement.