Card Loan Balances Hit Record High of 43 Trillion Won

Loan balances from credit card services (card loans) have exceeded 43 trillion won, marking an all-time high. This figure comes from the aggregated card loan balances of nine card companies (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin, and NH Nonghyup Cards) as of the end of May, totaling 43.2534 trillion won. Notably, card loan balances, which had seen a slight decrease at the end of April, began to rise again in May, reaching their highest level ever.

The increase is attributed to heightened funding demand during the "Family Month" holiday period and the "balloon effect" of customers turning to card loans as bank lending became more difficult. Industry insiders cite the Family Month funding needs and the spillover effect from bank lending restrictions as primary drivers. One card company official told Yonhap News, "There was demand for funds during the Family Month holidays, and it appears borrowers who couldn't get loans from banks have shifted to card loans."

The potential influx of demand from "debt-fueled investing" (bitto) amid a booming stock market is also being discussed. A card company official stated, "The stock market is likely where money is needed right now," adding, "In addition to the Family Month effect, loan demand for stock investments may have acted as a combined factor." However, some express caution regarding the actual scale of this bitto demand, pointing to card loan interest rates that can be as low as 8-9%. The balance of credit transaction loans stood at 37.9797 trillion won as of the 18th, nearing the previous record high of 38.0227 trillion won set on April 29th. Specifically, credit transaction loan balances on the stock market reached 28.9275 trillion won, approaching its all-time peak.

Financial authorities have instructed the industry to manage the growth rate of household loans, including card loans, to around 1.5% this year. It is also reported that some card companies have been asked to manage their total household debt volume. The Financial Supervisory Service reportedly met with several card companies late last month to discuss household debt volume management.