CASH CARD RATIO Meaning and
Definition
-
Cash card ratio refers to a financial metric that measures the proportion of cash and cash equivalents to outstanding credit card balances or credit limits. It is a key indicator used by lenders and financial institutions to assess the liquidity and creditworthiness of borrowers.
The cash card ratio is calculated by dividing the total cash and cash equivalents a borrower has on hand by the outstanding balances on their credit card accounts or the total credit limits available to them. This ratio provides insight into an individual's ability to cover their outstanding debts with readily available funds.
A higher cash card ratio suggests that a borrower has a sufficient amount of cash and cash equivalents to pay off their credit card debts if necessary. This indicates a lower risk for lenders, as the borrower has the means to meet their financial obligations. On the other hand, a lower cash card ratio indicates a higher level of dependency on credit, as borrowers have fewer liquid assets to offset their outstanding debts.
Financial institutions and lenders typically use cash card ratio as one of the factors in assessing creditworthiness when making lending decisions. It helps them determine the likelihood of borrowers defaulting on their credit card payments or their ability to repay the amounts borrowed, thus providing a better understanding of their overall financial health.
Common Misspellings for CASH CARD RATIO
- xash card ratio
- vash card ratio
- fash card ratio
- dash card ratio
- czsh card ratio
- cssh card ratio
- cwsh card ratio
- cqsh card ratio
- caah card ratio
- cazh card ratio
- caxh card ratio
- cadh card ratio
- caeh card ratio
- cawh card ratio
- casg card ratio
- casb card ratio
- casn card ratio
- casj card ratio
- casu card ratio
- casy card ratio
Infographic
Add the infographic to your website:
