Number of Users of '17% Interest Rate Card Loans' Increased by 170,000 Only Among Seniors in Their 60s

Assemblyman Song Seokjun: "Urgent Measures Needed for Low-to-Medium Credit Vulnerable Elderly"

[Image source=Yonhap News]

Over the 3 years and 6 months since the COVID-19 pandemic, the card loan balance and number of users among seniors aged 60 and above have increased by 2.5 trillion KRW and 170,000 people, respectively.

According to data submitted by the Financial Supervisory Service to Song Seok-jun, a member of the National Assembly's Political Affairs Committee from the People Power Party, the card loan balance rose from 29.11 trillion KRW at the end of 2019 to 34.85 trillion KRW at the end of June this year, an increase of 5.74 trillion KRW.

By age group, card loan balances increased in all age groups except those in their 30s, while the number of users decreased in all age groups except those aged 60 and above. For those in their 20s, the balance increased by 210 billion KRW while the number of users decreased by 30,000; for those in their 30s, the balance decreased by 650 billion KRW and users decreased by 250,000; for those in their 40s, the balance increased by 880 billion KRW but users decreased by 240,000; and for those in their 50s, the balance increased by 2.78 trillion KRW while users decreased by 10,000. Only the 60 and above age group saw increases in both balance and number of users.

In particular, the card loan balance growth rate for seniors aged 60 and above was 57.3%, the fastest increase among all age groups since COVID-19. The problem is that the average interest rate on card loans was high, ranging from a minimum of 11.66% to a maximum of 17.2% as of September. Moreover, the 3-year corporate bond rates (yeojeonchae), which are the funding costs for credit card companies, have been steadily rising, making it highly likely that card loan interest rates will increase in the future. Consequently, the interest burden on card loan users is expected to grow even heavier.

This raises concerns about the increasing principal and interest repayment burden and potential defaults among senior card loan users, who generally have weaker income bases. Representative Song stated, "It appears that since COVID-19, low- to mid-credit seniors with vulnerable incomes have increasingly turned to card loans as emergency livelihood loans," adding, "With anticipated future increases in card loan interest rates, proactive and preemptive measures by financial authorities are necessary to alleviate the principal and interest burdens on low- to mid-credit seniors."

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