Monthly Growing Card Loans... Financial Supervisory Service Demands Risk Management Plans from Card Companies

Lotte, Hyundai, and Woori Card Account for 60% of the Increase

[Image source=Yonhap News]

This year, as the outstanding balance of 'card loans,' a means for ordinary people to urgently borrow money, continues to reach record highs, the Financial Supervisory Service (FSS) has stepped in to curb some credit card companies.

According to data from the Credit Finance Association on the 18th, as of the end of July, the card loan balance of nine major credit card companies stood at 41.2266 trillion won, an increase of 6.4% (2.4653 trillion won) compared to the end of last year. This phenomenon has emerged due to the high interest rates and rising prices making the economy difficult for ordinary people, and the tightening of loan conditions at savings banks.

In particular, the increase in card loans was notable among some credit card companies. Lotte Card, Hyundai Card, and Woori Card accounted for about 60% of the total increase.

Specifically, Lotte Card's card loan balance at the end of July increased by 21.3% (915.7 billion won) from the end of last year to 4.2954 trillion won, accounting for 37.1% of the total increase. Following that, Hyundai Card increased by 14.0% (667.4 billion won) to 4.7762 trillion won during the same period, making up 12.3% of the total increase, and Woori Card rose by 11.6% (386.4 billion won) to 3.3335 trillion won, constituting 8.6% of the total increase.

In response, the FSS plans to require these three credit card companies, which have rapidly expanded their card loans, to submit risk management plans by the end of this month. The FSS views that these companies have engaged in aggressive sales by expanding card loan limits. While card loans should maintain their role as a quick cash source, the concentration of loans in specific companies is considered undesirable.