Card Loan Interest Rates Enter a Breather... "High Possibility of Another Increase"

[Asia Economy Reporter Yu Je-hoon] The soaring card loan (long-term card loan) interest rates have slightly decreased, entering a pause. This is because, as loan demand declined due to the government's total debt service ratio (DSR) regulations, card companies responded by raising adjusted interest rates, including preferential rates.

As of the end of last month, the average card loan interest rates of seven domestic full-service card companies (Lotte, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin) and NH Nonghyup Bank were recorded at 11.79% to 15.15%, according to the Credit Finance Association's disclosure information portal on the 27th. This is 0.15 to 0.83 percentage points lower compared to the previous month.

The reversal of the card loan interest rate trend, which had been rising steadily since the second half of last year, is due to the increase in adjusted interest rates. In fact, the average adjusted interest rate of six card companies (Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin) rose to 1.12%, nearly double the previous month's 0.58%. The adjusted interest rate is a customer-tailored discount rate that includes preferential rates and special promotional discounts.

The reason for the increase in adjusted interest rates is attributed to the decrease in card loan demand caused by DSR regulations. As the government tightened loan regulations on multiple debtors, card loan demand declined, prompting a response through raising adjusted interest rates. A card company official explained, "The main cause is the reduced demand for card loans from borrowers with low credit ratings due to DSR regulations."

However, the industry expects that the period of interest rate hikes will continue, so there is a high possibility that card loan interest rates will rise again. A financial sector official stated, "At present, it is difficult to guarantee whether card loan interest rates will maintain this trend," adding, "Even if funds have been secured in advance to prepare for interest rate hikes, if the base interest rate continues to rise, card loan interest rates may return to an upward trend."

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