The average interest rate for overdraft accounts at three internet banks has surged to 7.29%, the highest level in two years and three months. Concerns are growing that borrowers with lower credit ratings, whose loan rates are nearing 9%, will face increased financial burdens as they rely on these accounts for living expenses or emergency funds.
According to the Korea Federation of Banks, the average interest rate for new overdraft accounts at Kakao Bank, K Bank, and Toss Bank reached 7.29% in August. This marks a 1.47 percentage point increase from the same month last year (5.82%) and the highest rate since May 2024 (7.24%).
Among the banks, Kakao Bank had the highest rate at 7.94%, exceeding the average of the three internet banks by 0.65 percentage points. Toss Bank followed with a rate of 7.21%, while K Bank recorded a rate of 6.74%.
In comparison, the average rate for the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) was 5.17% in August, up 0.65 percentage points from the same month last year (4.52%). The increase in rates at internet banks was approximately 2.3 times greater than that of commercial banks, widening the average rate gap between the two to 2.12 percentage points.
The ongoing rise in market interest rates suggests that overdraft rates may continue to climb. These rates are typically calculated by adding a margin to the benchmark rate, which reflects market rates such as financial bonds, and subtracting any preferential rates.
The average interest rate for overdraft accounts at the three internet banks has been on an upward trend, rising from 6.04% in January to 6.11% in March and 6.26% in April. Although it dipped to 5.87% in May, it rebounded to 6.33% in June and 6.91% in July.
Notably, many borrowers using overdraft accounts at internet banks are individuals with lower credit ratings, which may exacerbate their interest burdens. In some lower credit segments, rates have already surpassed 8%. For instance, the interest rate for Kakao Bank borrowers with credit scores between 701 and 750 increased from 6.97% in August last year to 8.83% this August, a rise of 1.86 percentage points.
If a borrower uses 30 million won from an overdraft account for a year, the annual interest would be approximately 2.09 million won at a rate of 6.97%. However, if the rate rises to 8.83%, the annual interest would increase to about 2.65 million won, resulting in an additional burden of around 560,000 won due to the 1.86 percentage point increase.
Kim Sang-bong, a professor of economics at Hansung University, noted, "Current mortgage and credit loan rates are quite high when considering the benchmark and deposit rates, which could create barriers for individuals with lower credit ratings to access financial services."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.