Shinhan 19.9%, KB Kookmin and Hana 19.95%, etc.
Fee Rate Change Notice Ahead of Legal Maximum Interest Rate Reduction on the 7th of Next Month
[Asia Economy Reporter Ki Ha-young] Starting next month, the statutory maximum interest rate will be lowered from 24% to 20%, prompting credit card companies to announce changes in their fee rates. Since the reduction will be applied retroactively to previous loans, concerns about profitability deterioration are rising.
On the 1st, KB Kookmin Card announced through its personal member fee rate change notice that from the 3rd of next month, the maximum interest rate for short-term card loans (cash service), revolving credit agreements, and installment fees will be reduced to 19.95%. Currently, the cash service fee rate ranges from 5.9% to 23.9% annually, but starting next month, it will change to 5.9% to 19.95%. Revolving credit will also be adjusted from the current 5.6% to 23.6% to 5.6% to 19.95%, and installment fees will be revised from 8.6% to 21.4% to 8.6% to 19.95%.
Hana Card also announced that from the 1st of next month, the cash service and revolving credit fee rates for individual credit card members will be changed. Similar to KB Kookmin Card, the maximum interest rate for loan products such as cash service and revolving credit will be lowered to 19.95%.
Shinhan Card, the industry leader, also plans to apply the revised interest rates starting from the 1st of next month. For Shinhan Card, the maximum interest rate will be changed to 19.9%. Cash service rates will be adjusted from the current 6.1% to 23.9% annually to 6.1% to 19.9%, revolving credit from 5.4% to 23.9% to 5.4% to 19.9%, and installment fees will also be lowered from 9.5% to 20.9% to 9.5% to 19.9%.
Previously, credit card companies decided to apply the statutory interest rate reduction retroactively to existing loans. Although there is no obligation under the standard credit transaction terms to apply retroactively, they voluntarily chose to do so. As a result, the profitability of credit card companies is expected to be impacted. According to the Credit Finance Association, as of April, among users of cash services from the seven major full-service card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana), the proportion of those subject to interest rates exceeding 20% annually reached up to 56.17%.
An industry official said, "Starting next month, as the maximum interest rate is lowered, we are informing customers accordingly," adding, "Since the maximum interest rate cap is 20%, it is expected that each card company will autonomously apply fee rates within the 20% limit."
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