Outstanding Card Loan Balances Decline for Second Consecutive Month in July Amid Lending Regulations

In the first month following the introduction of the June 27 household loan regulations, the outstanding balance of card loans saw a slight decrease.

According to the Credit Finance Association on August 20, the outstanding balance of card loans at the end of July for nine card companies (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin, and NH Nonghyup Card) stood at 42.4878 trillion won, marking a slight decline from the previous month's 42.5148 trillion won.

This marks the second consecutive month of decline, following a slight decrease at the end of June due to the write-off of non-performing loans at the end of the quarter.

Analysts attribute this trend to the impact of the June 27 regulations, which limit the total amount of unsecured loans, including card loans, to within an individual's annual income.

Card loans have also been included in the third-stage stress-based Debt Service Ratio (DSR) regulations, which took effect in July. The card industry expects the downward trend in outstanding card loan balances to continue for the time being.

Outstanding balances of payment-type revolving credit and cash advances also declined slightly compared to the previous month. The outstanding balance of cash advances was 6.2658 trillion won, and the payment-type revolving credit balance was 6.7872 trillion won, both showing a slight decrease from the previous month's 6.3114 trillion won and 6.8111 trillion won, respectively.

However, the balance of refinancing loans-where borrowers take out a new loan from the same card company because they are unable to repay their existing card loan-increased slightly to 1.5282 trillion won, up from 1.4284 trillion won the previous month.