"Cut Card Loans"... Financial Services Commission Reviews Card Companies' Household Loans

[Asia Economy Reporter Ki Ha-young] Financial authorities held a review meeting with credit card companies that exceeded this year's household loan total volume target and urged them to manage loan products such as card loans.

According to the credit card industry on the 15th, the Financial Services Commission held a household debt management review meeting with Hyundai Card, Lotte Card, and the Korea Federation of Credit Finance Associations on the same day. It was reported that Hyundai Card and Lotte Card exceeded the annual total volume target for household loan growth by more than twice. The credit card industry's target for managing the household loan growth rate this year is around 5 to 6%.

According to the '2021 First Half Credit Card Company Business Performance' announced by the Financial Supervisory Service the day before, the amount of card loan usage in the first half of this year increased by 5.8% compared to the first half of last year. In particular, the usage amount of long-term card loans (card loans) surged by 13.8% to 28.9 trillion won.

As commercial banks have recently tightened loans, a 'balloon effect' may occur where loans increase in the secondary financial sector, including card loans, prompting financial authorities to closely monitor the situation. Card loans and cash advances are excluded from the Debt Service Ratio (DSR) regulations. Especially in the case of card loans, many multi-debtors have loans from multiple financial companies, making it a potential trigger in a household debt crisis.