Credit card loan growth slows on tighter rules

SEOUL, Aug. 23 (Yonhap) -- South Korea's credit card loan growth cooled in July and August after the government tightened rules as part of efforts to rein in the country's soaring household debt, data showed Tuesday. In June, financial regulators announced a set of measures against excessive card loans and cash advances to tackle the debt problem. South Korea's household debt has been rising to an alarming level, hitting a record 876.3 trillion won (US$810 billion) as of end-June. The average amount of daily card loans extended by six credit card companies reached around 250 billion won as of Aug. 18, down 11 percent from last month, according to industry data. The July figure also came in lower compared with the 290 billion won registered in June, trending lower for the second straight month. Industry officials said the decline came on the heels of the government's heightened efforts to curb excessive card loan growth. The Financial Supervisory Service (FSS), the country's financial watchdog, has been conducting weekly reviews of credit card companies on a number of categories such as loan increases and marketing costs, in a bid to limit the on-year growth of card firms' lending and individual users' limit to 5 percent. The 5 percent ceiling is based on the average growth rate of households' disposable income over the last five years, which stands at 5.1 percent. "So far, credit card firms have managed to stay in line with the appropriate levels on credit card loan growth, new issuances and marketing costs," said an FSS official, adding different levels were applied to companies given gaps in their market positions. The FSS plans to conduct special inspections on credit card companies who fail to abide by its guidance.