SEOUL, Oct. 27 (Korea Bizwire) — Credit card loans in South Korea soared more than 34 percent in September as cash-strapped people scrambled to borrow from card firms amid a protracted coronavirus outbreak, industry data showed Tuesday.
New loans extended by seven credit card firms — Shinhan, KB Kookmin, Woori, Hana, Samsung, Hyundai and Lotte — reached 4.2 trillion won (US$3.7 billion) last month, up 34.3 percent from a year earlier.
September represents the second-consecutive month of an on-year increase following an 11.7 percent surge in August.
Credit card loans have climbed on-year every month this year, except in May when they shrank 1.7 percent as the government gave citizens cash grants in a bid to help Asia’s fourth-largest economy tide over the coronavirus impact.
Analysts said September’s surge came amid high demand for loans from banks and nonbank financial institutions, with low-credit consumers being forced to resort to card issuers.
Also responsible was a low base effect, which means card loans in September last year came to slightly over 3 trillion won, much lower than the average for the previous eight months.
As of the end of June, outstanding card loans amounted to 29.8 trillion won, up about 700 billion won from six months earlier.
Self-employed people and small businesses in South Korea have been reeling from the coronavirus outbreak, which struck South Korea in late January and has caused the economy to hit the skids.