Credit-card delinquencies reach 10-year high

Finance

Published: 29 May. 2024, 18:18 Updated: 29 May. 2024, 19:25

Credit-card delinquencies reach 10-year high

Advertisements for card loans are displayed on a street in Seoul on Wednesday. [YONHAP]

Delinquencies on bank-issued credit-card loans reached a 10-year high in Korea.

The rate — which includes delinquencies on cash advances and long-term loans — stood at 3.4 percent at the end of February, its highest since November 2014, according to data compiled by the Bank of Korea. The highest-ever figure was 3.8 percent in 2005.

The uptrend is widely attributed to tightened credit standards among lenders, which have prompted those with lower credit scores to resort to credit-card loans with high interest rates.

Commercial banks, as well as non-banking lenders, have been upping their thresholds for credit loans as financial authorities make efforts to rein in household debt and mitigate delinquency risk amid high interest rates.

Outstanding household credit for the January-March period declined for the first time in four quarters, falling 0.1 percent from the previous quarter to 1,882.8 trillion won ($1,377.1 billion).

The outstanding balance of long-term credit-card loans from nine companies hit a record high of 39.96 trillion won in April, up 7.3 percent from a year earlier, according to the Credit Finance Association. The average interest rate stood at 14.26 percent.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]