Revolving Service Usage Rate... Highest Among People in Their 20s Across All Age Groups
Could Seriously Affect Credit Scores
"Had No Choice but to Use It Due to Insufficient Salary, Ended Up Facing a Cash Bomb"
Experts Say "Wages and Jobs That Ensure Basic Living Must Be Guaranteed"
[Asia Economy Reporter Han Seung-gon, Intern Reporter Kim Yeon-ju] #Office worker Kyung-mo (27, female) used the revolving credit card payment service for six months before canceling it. While it was convenient to pay only the desired amount of the card bill when circumstances were tight, she decided to cancel it because the increased revolving payment amount affected her card limit. Kyung said, "I heard the fees were high, but I used it because I needed it immediately," adding, "After deciding to cancel, I was hit with a cash bomb the following month and ended up taking out a loan to pay the card bill."
The revolving credit card balance for people in their 20s has nearly doubled in the past three years, showing the largest increase among all age groups.
Credit card revolving is a service that allows users to defer payment of their card bills by paying high fees, so they do not have to pay 100% of the bill immediately. While users can temporarily reduce the burden of card payments by deferring them, fees can exceed 20%, which may negatively affect credit ratings.
According to the 'Revolving Balance Status of Four Major Credit Card Companies (Shinhan, Samsung, Hyundai, Kookmin)' received by Jang Hye-young, a member of the National Assembly's Planning and Finance Committee from the Financial Supervisory Service on the 10th, the revolving balance for people in their 20s increased by 87 percentage points from 17.8 billion KRW in May 2017 to 33.2 billion KRW in May this year, marking the largest increase among all age groups.
Additionally, the usage growth rate of the revolving service among people in their 20s was the steepest among all age groups. The order was followed by those aged 60 and above (28.5%), 30s (16.6%), 40s (13.1%), and 50s (11.0%). The overall revolving balance growth rate was 17.8%.
The problem is that continuous use of this service can lead to an inability to pay the accumulated balance, resulting in delinquency and the burden of large fees, creating a vicious cycle.
Kim (29, male), a former revolving service user, said, "I thought it would be okay if I controlled my spending, but credit cards are different from cash, so it was harder to control," adding, "I increased my limit as much as possible, but even that was insufficient. Eventually, I settled the balance with my part-time job severance pay and canceled the service."
Kim explained, "When I heard it was fatal to my credit rating, I thought I could just use it and cancel quickly, but it wasn't easy," and added, "I want to say it's better not to start at all."
Office worker Lee (26, female) said, "I used the service because my salary was too low, but I didn't realize I wouldn't be able to stop midway," adding, "My salary stayed the same, but the accumulated card bills kept increasing."
In severe cases, it was found that people took out loans to pay their card bills. They postpone payments, accumulate card bills they cannot handle, and then take out loans with high interest rates to try to cover the payments, a practice known as 'circular borrowing.'
On online communities sharing financial information, posts documenting methods and processes to repay revolving balances are continuously posted. They mainly resolved card payments through revolving conversion loans.
One financial online community posted an article titled "I took out a revolving conversion loan for oo card and sorted it out well."
The author wrote, "I blamed myself and felt foolish for spending money like that all along," but also said, "I wasn't confident the loan would go through, but I managed to sort it out well."
They added, "I think I shouldn't use cards recklessly in the future," and "I will manage it steadily without delinquency."
Experts point out that the rapid increase in revolving service use among people in their 20s is related to youth financial hardship.
Professor Kim Tae-gi of Dankook University's Department of Economics said, "Young people face employment difficulties, and even if they find jobs, wages are so low that they are driven to use services like revolving credit that affect their credit ratings," adding, "Part-time job opportunities are drying up, and young people are falling into poverty."
Professor Kim suggested, "If users of services like revolving cannot pay their balances, they eventually turn to secondary or tertiary financial institutions, risking becoming credit delinquents," and emphasized, "Young people need guaranteed wages and jobs that allow them to maintain a basic standard of living."
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