Hyundai Card Raises September Card Loan Interest Rates... "Adjusting Card Loan Speed"

Five Companies Except Hyundai and KB Kookmin Card
Card Loan Interest Rates Slightly Lowered

[Asia Economy Reporter Ki Ha-young] Hyundai Card raised the interest rates on long-term card loans (card loans) last month. This is interpreted as a move to slow down card loans in response to pressure from financial authorities to comply with the total household loan volume guidelines.

According to the credit finance association's disclosure on the 21st, as of the end of September, Hyundai Card's average interest rate (operating price) for card loans based on the standard grade was 13.39%, up 0.59 percentage points from the previous month. Earlier, the financial authorities held a household loan inspection meeting last month and urged Hyundai and Lotte Card, which exceeded this year's household loan volume target, to manage loan products such as card loans. The card industry's target for managing this year's household loan growth rate is around 5-6%, but it is reported that the two companies exceeded this by more than twice.

Accordingly, Hyundai Card and Lotte Card are reducing the overall scale of card loans. They are reducing loan limits based on borrowers' repayment ability and debt situation, and refraining from marketing for new loans. Lotte Card's card loan interest rate rose by 2.2 percentage points in August alone.

Except for Hyundai Card, other card companies saw their average card loan interest rates decrease last month. KB Kookmin Card's card loan interest rate also rose, but the increase was only 0.01 percentage points. Shinhan Card and Woori Card saw nearly a 1% drop, marking a significant decrease. Shinhan Card recorded 11.46%, down 1.08 percentage points, and Woori Card recorded 12.85%, down 0.95 percentage points, with interest rates for high-credit borrowers in grades 1-2 dropping significantly. Samsung Card fell 0.67 percentage points to 12.93%, while Lotte Card and Hana Card dropped 0.12 and 0.08 percentage points to 15.43% and 12.60%, respectively. As a result, the average card loan interest rates for the seven full-service card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana Card) in September ranged from 11.46% to 15.43%, slightly down from the previous month. The average for the seven companies was 13.17%, down 0.32 percentage points from 13.49% the previous month.

Card loan interest rates are expected to rise in the future. The Bank of Korea has signaled another rate hike within the year, and the financial authorities' stance on curbing household loans remains unchanged. According to the Financial Supervisory Service, card loan usage in the first half of this year increased by 5.8% compared to the first half of last year. In particular, long-term card loan usage reached 28.9 trillion won, a sharp increase of 13.8%. The additional household debt measures to be announced on the 26th are likely to include the early implementation of the Debt Service Ratio (DSR) for card loans.