Credit Delinquents Reach Nearly 3 Million

The number of credit delinquents increased 110,000 persons to 3 million last month. The figure has continued to rise this year and is expected to reach new highs each month, calling for urgent countermeasures.

The Korea Federation of Banks (KFB) announced on April 23 that those who defaulted on their credit cards stood at 2,956,794 as of the end of March, up 118,470 or 4.17% compared with that at the end of February. The increase for each month rose to 106,000 in January from 62,000 last December, and fell to 96,000 in February. However, it surged again in March.

Credit delinquents are defined as those who have delayed payment on loans over 1 won or for credit card debts over 300,000 won for three consecutive months. Accordingly, the rapid rise of credit delinquents in March suggests a surge of debtors who have failed to repay debts since last December.

Credit card debtors jumped 90,728 to 176,701 compared with that of a month ago, accounting for the lion`s share of the increase in March.

The rise in credit delinquents is attributed to late payments on card loans (19.43%), followed by general loans (12.44%) and credit card use (11.54%).

New credit delinquency cases increased 731,132 (6.6%) to 11,727,670 persons compared with that of February. Each credit delinquent is responsible for an average of 4 cases.

The highest rate of increase among the age brackets was 5.59% (teenagers); followed by 5.73% (those in their 20s); 4.63% (those in their 30s); and 3.33% (those in their 40s).

“When the delinquency rate falls, the number of credit delinquents also decreases,” forecast Lee Gun-bum, a senior researcher at the Korea Institute of Finance (KIF). “It is not likely to fall this year and the increasing trend will be slow in the second half.”

Chi-Young Shin higgledy@donga.com