Credit Card Loans Decline for Two Consecutive Months Amid Increased Refinancing and Cash Services

Due to strengthened management of household loans by financial authorities, the outstanding balance of credit card loans in South Korea has decreased for two consecutive months. In contrast, refinancing loans and cash services have seen increases, indicating ongoing repayment burdens for vulnerable borrowers.

According to the Korea Credit Finance Association on August 20, the outstanding balance of credit card loans from nine major card companies (Samsung, Shinhan, Hyundai, KB Kookmin, Lotte, Woori, Hana, BC, and NH Nonghyup) was recorded at 42.7957 trillion won at the end of July, a decrease of 113.6 billion won from the previous month’s 42.9093 trillion won.

The balance of credit card loans began to decline in June after reaching an all-time high in May, influenced by the financial authorities' stricter management of household loans. The credit finance industry aims to keep the growth rate of household loans, including credit card loans, at around 1.5% this year.

However, indicators reflecting the repayment burden of borrowers at high risk of default have risen again. The balance of refinancing loans, which are taken out by borrowers unable to repay their existing credit card loans, increased by 995 billion won (6.4%) to 1.648 trillion won at the end of July.

Additionally, the balance of revolving credit, which is a form of payment service, rose by 438 billion won to 6.8759 trillion won. During the same period, the balance of cash services, a type of short-term card loan, increased by 2.409 trillion won to 7.0251 trillion won.