Card Loan Interest Rate Comparison Made Easier... Preferential Rates Disclosed from the 20th

New Loan Interest Rate Disclosure System Applies to 'Card Loan' from the 20th
Scheduled for Credit Loans in September and Cash Services in November

[Asia Economy Reporter Ki Ha-young] Starting from the 20th, the different credit rating systems used by each card company will be standardized. As preferential interest rates applied by credit rating will also be separately disclosed, consumers are expected to find it easier to compare card loan interest rates.

The Korea Federation of Credit Finance (KFCF) announced on the 19th that it will improve the card loan product comparison disclosure system and apply it from the 20th of this month. The new disclosure standard is based on the 'default rate,' which is the probability of being overdue for more than 90 days within one year from the loan handling date. Interest rates will be disclosed according to the 'standard rating,' which converts each card company's internal rating into a 10-grade system.

Currently, card companies disclose loan interest rates based on credit rating standards provided by external credit bureaus (CBs). However, there have been criticisms that the actual credit rating is determined according to each company's internally operated internal rating, resulting in differences between the disclosed standards and the actually applied standards.

The rating segments will also be adjusted from the current 'grades 1 to 3, grade 4, grade 5, grade 6, grades 7 to 10' to align with banks and mutual finance institutions as 'grades 1 to 2, grades 3 to 4, grades 5 to 6, grades 7 to 8, grades 9 to 10.'

For each standard rating, the 'base price,' which is the interest rate before discount, the 'adjusted rate,' indicating the discount amount, and the 'operating price,' the final interest rate after applying the discount, will be disclosed in detail. Additionally, to prevent consumer confusion and provide diverse information, disclosures by existing credit bureau (CB) credit ratings will also be conducted in parallel.

The new loan interest rate disclosures can be checked on the KFCF website starting from the 20th for card loans. In September, the new standards will be applied to credit loan disclosures, and in November, to cash service loan interest rate disclosures.

A KFCF official stated, "The disclosed data unifies the different internal rating systems of each card company into a 10-grade system based on default rates, so there may be differences from the interest rates actually applied at the time of loan. Since it is the average interest rate of loans handled in the previous month (for card loans and credit loans) or the previous quarter (for cash services), it should be noted that it may differ from the interest rates currently applied at the time of disclosure."

This content was produced with the assistance of AI translation services.