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South Korean credit card users are increasingly turning to revolving services that carry over dues despite the high interest rates, raising concerns about piling personal debt.
According to the Credit Finance Association on Thursday, the average interest rate on cash advances offered by eight local card companies stood at 17.47 percent in August, down slightly from 17.51 percent in July but still notably high.
The eight credit card companies are Shinhan Card Co., Samsung Card Co., KB Kookmin Card Co., Hyundai Card Co., Lotte Card Co., Woori Card Co., KEB Hana Card Co., and BC Card Co.
KEB Hana Card had the highest cash advance rate at 18.23 percent, followed by KB Kookmin Card at 18.13 percent and Lotte Card at 17.79 percent.
Samsung Card had the highest card loan rate at 15.06 percent, followed by BC Card at 14.69 percent.
Lotte Card had the highest interest rate for revolving credit on the card at 17.76 percent, followed by KB Kookmin at 17.5 percent.
Revolving credit on the card refers to a service that allows users to pay only a portion of their credit card bill, with the balance carried over to the next month. Revolvers, however, could face mounting interest debt if they heavily count on the service.
Card loans totaled 35.8 trillion won ($26.7 billion) at the eight credit card companies as of the end of August, up by 468.4 billion won from July.
The cash advances amounted to 6.47 trillion won, up 71.2 billion won during the same period.
The Financial Supervisory Service, in the meantime, recently implemented a measure that forces credit card firms to disclose their interest rates for cash advances and revolving credit plans on the 20th day of each month.
The move aims to urge card companies to lower loan rates and broaden the choices available to consumers.
By Ryu Young-sang and Han Yubin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]