"Card Loans Also Restricted" Government Moves to Block Real Estate Yeongkkeul

Card Loans from Credit Card Companies
to Be Classified and Managed as Personal Credit Loans

A view of apartment complexes in downtown Seoul from Namsan, Seoul. 2025.06.27 Photo by Dongjoo Yoon

The government, aiming to curb overheating in the real estate market, has decided to classify card loans issued by credit card companies as personal credit loans as part of its efforts to manage household debt. This move is interpreted as an attempt to block the so-called "Yeongkkeul" phenomenon, where individuals take out excessive loans, even utilizing card loans, to purchase homes.

According to the financial sector on July 2, the Financial Services Commission (FSC) notified the Credit Finance Association and credit card companies the previous day that card loans from card companies would be included in the category of personal credit loans. This is understood as an effort to prevent real estate "Yeongkkeul" buyers from using card loans as part of their home purchase funds.

Card loans are a short-term financing service provided by credit card companies. While they have been classified as "other loans" by regulatory authorities, they are similar to personal credit loans in that they are extended solely on the basis of credit, without collateral. Most credit card companies currently set the maximum limit for card loans at 50 million won.

During previous periods of rapid real estate price increases, there were instances where homebuyers used not only bank credit loans but also card loans to scrape together the necessary funds for property acquisition.

The FSC has decided to exclude cash advances from the category of personal credit loans, considering that cash advances are generally for smaller amounts than card loans and must be repaid the following month, making them more similar to credit purchases.

The industry is concerned that including card loans in the scope of personal credit loan regulations will restrict the supply of emergency funds to genuine demand-side borrowers. In addition, credit card companies, which have relied on financial products such as card loans for profits due to ongoing reductions in merchant fee rates and a deteriorating economy, are reportedly worried about a decline in profitability.