Credit Card Company Revolving Balances Decrease After 10 Months... Loan Interest Rates Also Drop

Card Loan Balances Decrease... Cash Service Increases
Card Companies Respond to Authorities' Pressure on Interest Profiteering

[Asia Economy Reporter Minwoo Lee] Last month, the revolving credit and card loan balances, which serve as quick cash channels for ordinary people, decreased compared to the previous month. This marks the first decline in revolving credit balances in 10 months. Meanwhile, cash service balances increased slightly. As authorities continue to pressure for interest rate cuts, future trends are drawing attention.

According to the Credit Finance Association on the 21st, the revolving credit balances of seven full-service card companies?Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, and Hana?were recorded at 7.2621 trillion KRW, a decrease of about 0.2% compared to the previous month. The revolving credit balance, which had been increasing every month since March last year, has slowed its growth for the first time in 10 months. Revolving credit is a service that allows partial payment of credit card bills and defers up to 90% of the balance to the next month without a delinquency record. Because it reduces the burden of lump-sum repayment, it is mainly used by those in need of quick cash.

Card loan balances also decreased. As of the end of last month, the balance stood at 33.6404 trillion KRW, down 0.8% (about 282 billion KRW) from the previous month. However, cash service balances increased by 4.9% (about 306.9 billion KRW) to 6.533 trillion KRW compared to the previous month.

Meanwhile, interest rates on various loan products from card companies also declined. According to the Credit Finance Association and others, Woori Card lowered its average card loan interest rate to 14.70% in January, down 1.66 percentage points (p) from the previous month. Samsung Card’s average card loan interest rate in January was 15.13%, down 0.53 p from the previous month. Shinhan Card also dropped 0.36 p to 14.67%. The card loan interest rates, which had peaked in the 16% range, appear to have somewhat stabilized.

It seems this is in response to the authorities’ various pressures targeting the entire financial sector, including banks. Last year, when funding became difficult, card companies reduced customer usage limits and raised interest rates on unsecured loans. This has drawn criticism for ignoring customers’ economic hardships.

[Image source=Yonhap News]

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