As regulations on household loans extend to credit lines (also known as negative balance accounts), a "limit war" is intensifying between banks and borrowers. Banks are cutting limits and reclaiming unused credit, while borrowers are seeking to switch to banks with higher limits or find ways to maintain their existing limits.
According to the financial sector on July 7, major commercial banks are reducing credit limits in line with household loan management. KB Kookmin Bank and Woori Bank have lowered their maximum limits to 50 million won, while Hana Bank continues to offer up to 100 million won. Shinhan Bank allows borrowers to access up to 100% of their annual income. Although each bank operates differently, the trend of more conservative limit management is common. Internet banks have also reduced their limits from 200 million to 300 million won down to 100 million won.
Existing limit management is also being tightened. Shinhan and Hana banks, which previously had looser limits, are reducing credit lines that have not been used for an extended period. K-Bank has even suspended new credit line openings this month. This action considers that the established limits, regardless of whether loans are actually executed, fall under household loan management.
As household debt management coincides with rising financial costs, the burden of interest rates has also increased. Even high-credit borrowers are facing higher costs, with negative balance account interest rates climbing to the mid-5% range. In May, the loan interest rates for borrowers with credit scores between 901 and 950 at the five major banks ranged from 4.51% to 5.16%. Woori Bank (5.16%) and Shinhan Bank (5.06%) have already surpassed the 5% mark.
However, demand from borrowers remains strong. Following a surge in the KOSPI, there is ongoing demand for funds for stock investments, living expenses, and business operations. Consequently, more borrowers are moving to banks with relatively generous limits. There is also a trend of seeking additional limits by comparing banks like Industrial Bank of Korea, Busan Bank, Gyeongnam Bank, and iM Bank, which maintain existing personal loan regulations.
Online communities are sharing methods to maintain or maximize credit limits. Common strategies include submitting documentation related to jeonse funds or lease contracts to clarify funding plans, or reflecting income increases to request a reassessment of limits.
Experts advise that if immediate funding is not required, it may be more beneficial to focus less on credit limits and consider taking out personal loans. Most banks have eliminated early repayment fees for personal loans, and the interest rates for general personal loans are about 0.5 percentage points lower than those for negative balance accounts, making borrowing and repaying a more cost-effective option.
* This article has been translated by AI.
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