Credit card holders will be banned from paying back cash advances in installments from next February.
Major companies including Hyundai Card, KB Kookmin Card, Samsung Card have already halted the practice.
Other players that have not yet done so will end installment-based debt payments before March 2014, according to sources in the industry.
The move comes after financial authorities urged credit card firms to stop offering the services to help control the country’s snowballing household debt, especially among the low-income bracket.
The practice is often used by customers who want to divide up debt payments in equal amounts and repay the amount over 3-6 months.
“(Cash installment payment service) enables customers to get cash from their credit card and pay in installments. We already terminated it, and so will the other (credit card) companies,” said a spokesperson of Hyundai Card Co.
Each credit card firm in April held separate meetings on the matter, after receiving guidelines from the state regulator, the spokesperson added.
Credit card companies said the change has been a gradual move, despite widespread concerns among customers.
“Stopping the cash installment service is unlikely to have a negative impact on balance sheets, since credit card users will still pay what they owe,” said a spokesman of the Credit Finance Association.
But he added that he was unsure how it would affect the number of credit card users.
By Chung Joo-won (
joowonc@heraldcorp.com)
