South Korean card loan refinancing balances hit record high

The balance of card loan refinancing—where borrowers take new loans to pay off existing ones—has reached a record high. As of the end of last month, the balance stood at 1.6953 trillion won, a 22.7% increase from 1.3817 trillion won at the end of last year.

Additionally, revolving credit balances, which allow customers to pay only a portion of their card bills and defer the rest, rose by 4.2% from 6.7201 trillion won at the end of last year to 6.9994 trillion won last month. Industry experts suggest these rising figures indicate worsening financial conditions for vulnerable borrowers and increasing repayment burdens.

While refinancing can temporarily lower delinquency rates, it poses long-term risks to the financial soundness of credit card companies. The Bank of Korea has noted growing concerns regarding asset quality due to the increasing proportion of medium-to-low credit borrowers. However, financial authorities currently maintain that the situation does not yet threaten overall financial stability.