Last Month's Card Loan Interest Rate Increase... Decrease in High Credit Borrowers and Increase in Low Credit Borrowers

Average of 7 Major Credit Card Companies at 13.28%
0.32%p Increase Compared to Previous Month

[Asia Economy Reporter Ki Ha-young] Last month, card loan interest rates slightly increased. It is analyzed that high-credit borrowers who used high-interest card loans for investment with borrowed money, such as public offering subscription and cryptocurrency, decreased their usage, while relatively low-credit borrowers increased theirs. This is attributed to the absence of major investment events last month and the reduction of marketing efforts such as interest rate discounts offered to high-credit borrowers by some card companies.

According to the disclosure by the Credit Finance Association on the 22nd, as of the end of May, the average card loan interest rates (operating price) based on standard grades of seven specialized card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana Card) ranged from 12.68% to 14.03%. The average of the seven companies was 13.28%, up 0.32 percentage points from 12.96% the previous month.

Among the seven card companies, six except Samsung Card saw an increase in average card loan interest rates. In particular, Woori Card raised the average by 1.14 percentage points from the previous month to 12.94%, pushing up the average of specialized card companies. For Woori Card, the adjustment rate, a kind of marketing that adjusts the base price through preferential interest rates and special discount rates, decreased compared to the previous month, resulting in higher card loan interest rates for relatively high-credit borrowers in grades 1 to 2.

Looking at individual card companies, Hyundai Card had the lowest rate at 12.68%, up 0.22 percentage points from the previous month. Following were Hana Card at 12.75%, up 0.31 percentage points, and Shinhan Card at 13.39%, up 0.41 percentage points. KB Kookmin Card and Lotte Card recorded 13.50% and 13.67%, respectively, each rising 0.22 percentage points from the previous month. Samsung Card was the only one to decrease by 0.31 percentage points from the previous month but still recorded the highest average loan interest rate among the seven card companies at 14.03%.

Last month’s average card loan interest rate also rose compared to early this year. In January this year, the average card loan interest rates based on standard grades of the seven specialized card companies ranged from 9.61% to 14.71%, with an average of 12.69%. Compared to then, last month’s average card loan interest rate increased by 0.59%, indicating a relative increase in card loan usage by low-credit borrowers.

From the 7th of next month, the maximum interest rate will be lowered from 24% to 20%. When the legal maximum interest rate reduction is implemented, card companies are likely to tighten loan screening more strictly than before to reduce defaults.

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