Card Loan Balances Hit Record High of Over 43 Trillion Won in May Amid 'Family Month' Spending and Debt-Financed Investments

The balance of card loans held by domestic credit card companies surpassed 43 trillion won last month, setting a new record high.

According to the Credit Finance Association on Monday (June 22), the combined card loan balance for nine credit card companies (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin, and NH Nonghyup Card) stood at 43.2534 trillion won at the end of May, an increase of 270.4 billion won from the previous month.

Card loan balances had set consecutive records for the first three months of the year before seeing a slight decline at the end of April, only to rise again last month.

The balance, which stood at 42.585 trillion won at the end of January, increased by 317.2 billion won in February and 92 billion won in March to reach 42.9942 trillion won, before falling by 11.2 billion won to 42.983 trillion won at the end of April.

Card loans typically show seasonal characteristics of increasing early in the year as credit card companies actively engage in marketing.

Industry analysts attributed last month's increase to the "Family Month" effect and a "balloon effect" resulting from tighter regulations on household loans in the banking sector.

An industry official stated, "There was demand for funds during the Family Month holidays, and it appears there were cases where individuals turned to card loans after being unable to secure loans from banks."

It is also estimated that there was demand for "debt-financed investments" (borrowing money to invest).

The Financial Supervisory Service reportedly summoned some credit card companies at the end of last month to urge them to manage the total volume of household debt.

Financial authorities have ordered the industry to manage the growth rate of household loans, including card loans, at around 1.5% this year.

The balance of refinancing loans, where borrowers take out new loans from the same card company to pay off existing card loans they cannot repay, rose to 1.6559 trillion won last month, up from 1.5983 trillion won the previous month.

The balance of revolving credit also saw a slight increase to 6.7999 trillion won from 6.7065 trillion won the previous month.

The balance of cash advances stood at 6.5038 trillion won, an increase from 6.1965 trillion won the previous month.

(Photo: Yonhap News TV, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.