ANN/THE KOREA HERALD – Credit card loans in South Korea surged to a record high this year as banks tightened lending and small businesses struggled amid weak domestic demand, officials reported.
Loans from eight major credit card companies totalled KRW44.67 trillion (USD34.05 billion) in the first eight months of 2024, surpassing 2023’s total of KRW41.55 trillion, according to Financial Supervisory Service (FSS) data released by Rep Kang Min-Kuk of the People Power Party.
This is the highest eight-month figure since the FSS began tracking the data in 2003. Credit card loans have steadily increased, from KRW35.03 trillion in 2019 to KRW39.66 trillion in 2022.
The rise is attributed to borrowers turning to card firms as banks raised interest rates and tightened lending to control household debt
The delinquency rate on card loans jumped to 3.1 per cent by August, from 2.4 per cent at the end of 2023, with overdue loans growing to KRW1.37 trillion, up from KRW860 billion in 2022 and KRW983 billion in 2023.
“Self-employed people and small businesses are likely behind much of the borrowing, struggling with high interest rates and weak demand,” a card firm official noted.
A record 986,487 business shutdowns were reported last year, and 75 per cent of businesses earned less than KRW1 million monthly in 2022, according to government data.
