Anchor: The delinquency rate for bank-issued credit card loans has reached the highest level in eight years on the back of soaring interest rates. With the rates imposing a greater burden on cardholders, there are concerns that the number of delinquent borrowers will increase further.
Max Lee reports.

Report: The delinquency rate of loans from cash advances and bank-issued credit cards is rising steeply.

According to data from the Bank of Korea on Tuesday, the loan delinquency rate from such cards came to two-point-nine percent as of the end of August, the highest level in eight years since it reached three-point-one percent in August of 2015.

The delinquency rate of credit card loans at commercial banks peaked at three-point-four percent in November 2014 and has since declined.

After falling to one-point-eight percent in September 2022, however, the rate rose to two-point-two percent in January of this year before surging to nearly three percent in the second half of this year.

The rise in credit card loan delinquency is noticeably higher than delinquent household loans at commercial banks, with a rate of zero-point-four percent as of the end of August, far lower than the rate for credit cards.

The significant increase in consumers unable to repay their credit card loans is attributed to high interest rates and the economic slowdown.

The increased delinquency has also been pinned on the higher interest rate card-based loans carry compared to regular bank loans, indicating that such borrowers have already exhausted alternatives or need liquidity urgently.

A higher delinquency rate for credit card loans may mean that vulnerable borrowers are struggling to repay other loans, which may be a warning about the soundness of financial institutions.
Max Lee, KBS World Radio News.