Card Loan Interest Rates Ease... From 15% in Early Year to 13% in March

Declining for 3 Months
Hyundai Card Falls to 12% Range

The average interest rate on long-term card loans (card loans), which exceeded 15% at the beginning of the year, dropped to the 13% range last month. Some companies have even lowered it to the 12% range.

According to the Credit Finance Association on the 21st, the average card loan interest rate in March for seven major card companies (KB Kookmin, Lotte, Samsung, Shinhan, Woori, Hana, Hyundai Card) was recorded at 13.99%. The card loan interest rates, which were in the 15% range from the end of last year to the beginning of this year, appear to be somewhat stabilizing.

Specifically, Hyundai Card's card loan interest rate was the only one to record in the 12% range at 12.89%. It fell by nearly 1 percentage point compared to 13.97% the previous month.

Woori Card (13.54%) and Shinhan Card (13.95%) showed rates in the 13% range. However, these slightly increased compared to the previous month. KB Kookmin Card (14.03%), Samsung Card (14.16%), Hana Card (14.64%), and Lotte Card (14.75%) recorded rates in the 14% range, dropping by 0.9 to 0.35 percentage points compared to the previous month.

This seems to reflect a delayed effect of the base interest rate being frozen and the stabilization of the interest rate on specialized credit finance bonds, which serve as the funding cost for card loans. According to the Korea Financial Investment Association, the interest rate on specialized credit finance bonds (AA+, 3-year maturity) was 3.984% as of the 20th. It has fallen to the high 3% range since mid-last month. On the 24th of last month, it dropped to 3.804%. Compared to 6.088% in early November last year when the bond market was tight, it has fallen by more than 2 percentage points. Additionally, the recent emphasis by financial authorities on win-win finance is also expected to have indirectly influenced the interest rate reduction.