Card and Capital Industry Agree on Retroactive Application of Legal Maximum Interest Rate Reduction

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[Asia Economy Reporter Gong Byung-sun] The card and capital industries have decided to retroactively apply the lowered statutory maximum interest rate to borrowers before the enforcement date of July 7.

According to the specialized credit finance industry on the 25th, the card and capital industries have decided to retroactively apply the lowered maximum interest rate to users before the enforcement date of the statutory maximum interest rate reduction and have begun preparations for its application.

An industry official stated, “According to the terms and conditions, card and capital companies are not required to apply the lowered maximum interest rate to borrowers before the new law’s enforcement date, but considering fairness with users in the loan industry, we agreed to apply it retroactively. The final decision is up to each company, but as far as I know, there are no members opposing it.”

Last month, as the amendment to the Enforcement Decree of the Loan Business Act and Interest Limitation Act passed the Cabinet meeting, the current statutory maximum interest rate of 24% will be lowered to 20% starting July 7.

Unlike the card and capital industries, savings banks’ terms and conditions stipulate that the new maximum interest rate will apply even to existing contracts (contracts concluded, renewed, or extended after November 1, 2018). A savings bank official explained, “We considered the case when the statutory maximum interest rate was adjusted from 27.9% to 24%, and the card and capital industries applied it retroactively.”

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