First of all, credit card cash-out has increased the instability in my country’s financial order.

my country has a strict access system for financial institutions, and has a series of strict regulations to monitor the inflow and outflow of funds from financial institutions. Those criminals united with merchants to conduct unreal transactions such as swiping cards through virtual POS machines, and engaged in disguised credit card cash withdrawals. However, they were outside the legal framework, violated the country's legal provisions on financial business franchises, and deviated from the People's Bank of China's cash regulations. Management regulations.

It may also provide convenient conditions for illegal activities such as "money laundering", which undoubtedly creates unstable factors for our country's overall financial order. In addition, the increase in bank risks and the formation of a large number of non-performing loans will also destroy the integrity environment of society and hinder the healthy development of the credit card industry.

Secondly, illegal cash withdrawals cause huge harm to card-issuing banks. The vast majority of credit cards are unsecured lending instruments. As long as the cardholder makes a purchase, the bank must bear a share of the repayment risk.

So under normal circumstances, banks prevent overdraft risks through high overdraft interest or cash withdrawal fees. However, the act of cashing out on a credit card circumvents the high cash withdrawal fees set by the bank and crosses the bank's prevention threshold. In particular, some loan intermediaries help cardholders forge identity materials and continuously increase credit card limits. The normal business of banks has been greatly disrupted and has also brought huge risks.

Due to the large amount of cash-out funds, cardholders are tantamount to obtaining interest-free and unsecured personal loans. The card-issuing bank cannot know the use of these funds, and it is difficult to effectively identify and track them. The credit risk pattern of credit cards has actually evolved into the credit risk of investment or speculation. Once the cardholder is unable to repay the cash amount, the bank will lose not only the loan interest, but also a large amount of assets.

Finally, for individual cardholders, credit card arbitrage also brings great risks to themselves. On the surface, the cardholder obtains cash through cashing out and reduces interest expenses, but in fact, the cardholder needs to repay the loan after all. If the cardholder cannot repay on time, he must bear higher interest than the overdraft interest. Late repayment charges may result in a bad credit record, making it very difficult to borrow funds from banks in the future, and you may even have to bear the legal risk of lack of personal credit.

Extended information

Classification of credit card arbitrage behavior

The first is the personal behavior of the cardholder. The cardholder plays with the idea of ??"other people use their own card for consumption". The trick is to charge other people's shopping accounts to your own card to increase points, and at the same time, the shopper will return cash to the cardholder. This is really a killing two birds with one stone for the cardholder. Because many banks have launched value-added services when issuing credit cards, and launched activities such as exchanging consumption points for gifts to stimulate people's enthusiasm for applying for cards and spending.

The second is that cardholders cooperate with merchants or certain "loan companies" and "intermediary companies", and cardholders obtain cash by paying merchant handling fees. Generally, the merchant's POS machine is used to conduct false transactions, and the amount on the credit card is transferred. The merchant or "loan company" or "intermediary company" pays cash on the spot (paying cash to the cardholder), and the cardholder pays the merchant The handling fees are lower than those of banks.

The third is that cardholders use the services of some websites or companies to cash out, such as using "Alipay" or China Mobile's "online purchase of recharge cards" services.

The fourth is to cash out small amounts without handling fees. The method is that in some shopping malls or other places where credit cards can be used for consumption, the cardholder pays in cash when checking out, and the cashier will collect the cash first and wait for the customer. After leaving, use your own credit card to withdraw the corresponding consumption, thereby achieving the purpose of cashing out a small amount.

Reference material: Baidu Encyclopedia - Cash out with credit card

Reference material: Baidu Encyclopedia - Cash out