Credit card firms suspend interest-free installment purchases

Local credit card firms have suspended interest-free installment purchases for card-accepting businesses with annual sales over 100 billion won (US$93.9 million) following a revised financial act, market sources said Saturday.

According to the sources, South Korean credit card firms stopped their interest-free installment purchase services for businesses, including large discount stores, airliners, and mobile carriers.

The suspension came as local credit card member stores refused to follow the revised Specialized Credit Financial Business Act, which stated they must share the burden of maintaining the interest-free installment purchase program with credit card firms.

Market watchers said the suspension is feared to weigh down on the spending of the lower income bracket, which usually depends on installment purchase plans to pay for communication fees and other expenses.

The country's credit card spending has been increasing gradually, with purchases made with plastic totaling 43.6 trillion won in October 2012, up 3.7 trillion won from a year earlier,according to the Credit Finance Association.

While most local financial firms are joining the suspension except for a handful of credit cards, the country's No. 2 industry player Samsung Card Co. said it will maintain its interest-free installment purchase policy.