The scale of card loans, which serve as a quick cash source for vulnerable groups in South Korea, including credit card loans and cash advances, has reached its highest point since statistics began in 2003.
According to data received from the Financial Supervisory Service by Kang Min-guk, a People Power Party lawmaker on the National Assembly, the total amount of card loans across the eight major credit card companies reached 44.665 trillion won ($34 billion) from 11.709 million loans as of the end of last month.
Of this amount, long-term card loans amounted to $29.6 billion from 6.582 million loans, while short-term card loans, or cash advances, stood at $4.4 billion from 5.227 million loans.
The delinquency rate, which reflects loans that have been overdue for more than one month, was recorded at 3.1%. This figure has steadily increased from 1.9% in 2021, 2.2% in 2022, and 2.4% last year.
The total amount of delinquent loans has also surged, rising from $547.9 million in 2021, $656.3 million in 2022, $750.2 million in 2023, to more than $1 billion last month. The scale of delinquencies last month marks the highest since 2003 ($4.6 billion) and 2004 ($1.5 billion), excluding the major credit card crisis of those years.
Industry experts believe that vulnerable groups, including mid- to low-credit borrowers and small business owners, are struggling to repay their loans. It is estimated that much of the increase in card loans is due to small business owners facing financial difficulties, which has led to higher delinquency rates.
Concerns have also been raised that borrowers who have already exhausted their borrowing options may turn to illegal private lending if they can no longer secure funds. Lawmaker Kang Min-guk emphasized the need for balanced management to ensure that the role of card loans as a source of funds for lower-income individuals can be maintained responsibly.