Since the outbreak of the COVID-19 pandemic, consumers and retail businesses have moved away from cash and have more often been preferring cards to conduct digital transactions.
Some people feared cash may be at greater risk of spreading the Coronavirus and countries such as China and South Korea were even sterilising their bank notes.
The World Health Organisation after suggesting in March that people should not use cash if possible, later clarified its position by not issuing a COVID-19 specific guidance with regards to using contactless payments.
So cash is not dead and it is still favoured by many consumers and businesses.
Using a card exclusively gives your bank a pretty clear picture of where your money is going.
But what is their attitude if you are still withdrawing large sums of money from an ATM and paying cash for many of your transactions? Is this now a red flag for a lender if you are applying for a loan?
In short, the answer is NO. But banks will still be looking carefully at your bank statements. This is nothing new as banks were doing this long before COVID-19 came into our lives.
Any item on a bank statement such as income, expenses and withdrawals are open to be questioned. As long as there is a satisfactory explanation which, if necessary, is supported with additional information/documentation, it’s unlikely to have a negative impact on a loan application.
Mark’s shout
Banks will be okay with anyone earning a decent income who can afford to take out large sums of money to spend on essentials or some luxuries.
They will also give the thumbs up to someone who regularly withdraws cash to cover bills and expenses, or to pay for a one-off expense such as paying down a credit card balance.
But if they see there have been large and/or regular ATM withdrawals made at hotels, bottle shops or clubs, that could present a problem if you are seeking a loan, as would regular payments to betting agencies. Banks could start waving the red flag.
