In July, the balance of KRW 42.5 trillion is reduced by 10% on new credit card loans
The balance of credit card loans fell for the second consecutive month in two years and seven months last month due to the impact of loan regulations. The credit card loan, which is considered a quick window for the common people, has seen a steady increase in balance due to the economic recession, but it has decreased in an unusual series. The amount of new credit card loans also decreased by more than 10%.
According to the Korea Credit Finance Association on the 20th, the balance of credit card loans by nine credit card companies (Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Hana, Woori, BC, NH Nonghyup Card) in July was 42.4879 trillion won, down 26.9 billion won from the previous month. The decline was not significant compared to 142.3 billion won in the previous month.
The credit card industry analyzes that the decrease in the balance of credit card loans is not significant due to the simultaneous management of credit card loans by credit card companies. Nine credit card companies’ new handling of credit card loans was tallied at 3.4174 trillion won last month. Considering that new credit card loans have recently been handled at 3.7 trillion won to 3.8 trillion won every month, it is interpreted that it has decreased by 10% this month alone.
The balance of credit card loans has also been on the decline for two consecutive months since May. It is the first time in two years and seven months that the card loan has shrunk for two consecutive months since December 2022. The balance of credit card loans has been on a steady rise, rising from 36 trillion won in 2022 to 43 trillion won earlier this year. After recording an all-time high of 42.9888 trillion won in February, it is on the decline again.
An official from the credit card industry said, “It seems to be due to the effect of financial authorities’ household loan management and credit card companies’ efforts to manage the soundness,” adding, “It may not seem to have any effect on loan regulation, but we will have to see the trend in the future because it has only been a month since the regulation.”
The credit card industry expected the balance of credit card loans to decrease significantly due to measures to strengthen household loan management implemented in June and the application of the three-stage stress total debt repayment ratio (DSR). This is because the credit loan limit that can be received by all financial sectors is limited to less than 100% of annual income, and the financial authorities have also included credit card loans in the credit loan limit regulation.
At the end of July, the balance of cash services was tallied at 6.26 trillion won, down 45.6 billion won from the end of June.
