Cash advance fees to pass W1 trillion |
A combination of government policy, a 30-percent interest rate and the highest credit card usage in the world is producing record revenues from cash advance fees.
Government officials say it is still early to sound the alarm, discounting suggestions that this constitutes an upward trend that harks back to the 2003 credit card crisis.
According to the Financial Supervisory Service (FSS)’s announcement Tuesday, profits from cash advances for the first half-year alone amount to 679.8 billion won, up almost 70 percent from 402.5 billion won for the same period last year.
Some industry watchers are nervous that this upward trend brings the country back to 2003, where dangerously overleveraged card companies only managed to avoid bankruptcy after a government-led intervention.
As the authorities began restricting retail bank lending this year, cash advances from credit cards have become the go-to lender; ironically the card companies are benefiting from government policy meant to rein in financial irresponsibility.
The Financial Supervisory Service spokesman tried to assuage fears, saying that there is no significant change, as the increased figure reflects the accounting standards reform and more importantly KB Card’s new inclusion in the statistics.
According to the Financial Supervisory Service (FSS)’s announcement Tuesday, profits from cash advances for the first half-year alone amount to 679.8 billion won, up almost 70 percent from 402.5 billion won for the same period last year.
Some industry watchers are nervous that this upward trend brings the country back to 2003, where dangerously overleveraged card companies only managed to avoid bankruptcy after a government-led intervention.
As the authorities began restricting retail bank lending this year, cash advances from credit cards have become the go-to lender; ironically the card companies are benefiting from government policy meant to rein in financial irresponsibility.
The Financial Supervisory Service spokesman tried to assuage fears, saying that there is no significant change, as the increased figure reflects the accounting standards reform and more importantly KB Card’s new inclusion in the statistics.
“We are keeping a close watch over the movements of cash advance levels,” he said.
KB Card reported 98.2 billion won worth of revenue from cash advances for the first half of this year.
KB Card reported 98.2 billion won worth of revenue from cash advances for the first half of this year.
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