No. of credit card delinquents jumps by 30 percent

The number of delinquent card loan borrowers reached near 500,000 over the past three years in 2011 as the economic slowdown turned such lending sour, data showed Sunday.

The number of credit card loan borrowers on default stood at 176,000 in 2011, up 29.2 percent from a year earlier, according to the Financial Supervisory Service.

The total number of such people reached some 488,000 following the 2008 global financial crisis in 2011, leading the value of loans overdue to reach 2.51 trillion won ($2.26 billion), according to the watchdog.

South Korea is grappling with growing household debt as households’ high indebtedness is feared to curb consumer spending, denting the economic growth.

In 2003, South Korea suffered from a burst of credit card bubbles after card companies excessively issued the plastic money to even unqualified college students.

As most card loan borrowers have low credit-worthiness, rises in the number of such borrowers and delinquency rates are feared to hurt the quality of household debt, market watchers say.

The FSS said in August that it will raise the minimum amount of revolving credit a card holder has to pay to a card company in a bid to help borrowers face less debt.

Revolving credit refers to the repayment of money borrowed from a credit card company such as cash advances through rolling over the monthly balance to the following month until it is fully paid off.

The delinquency ratio of revolving credit stood at 2.7 percent as of end-June, up from 2.23 percent at the end of last year. (Yonhap News)