According to the Financial Stability Status announced by the Bank of Korea in March 2022, the proportion of vulnerable borrowers (including multi-debtors and low-income consumers) among non-bank loans was 60.6%, significantly higher than that of non-vulnerable borrowers (39.
Card lending, which tends to feature high-interest loans, is increasing the burden of repayment when household debt reaches its limit. In particular, the use of credit cards by the most vulnerable consumers with a low ability to repay their debts can result in personal bankruptcy in the face of rising interest rates.
In line with increasing pressure on local households to manage their finances as they face rising inflation and the higher cost of goods in South Korea, some consumers are likely to turn to credit to manage outgoings. However, lower-income consumers will find it increasingly difficult to obtain a high amount of credit through card lending as financial institutions look to offset the likelihood of default on repayment.
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Non-mortgage consumer debt extended to individuals for personal or household use including installment loans and credit cards. Examples of consumer credit include auto lending, card lending, durables lending, education lending, home lending and other personal loans. Consumer credit includes both revolving and non-revolving credit.See All of Our Definitions
This report originates from Passport, our Consumer Credit research and analysis database.
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