By Park Hyong-ki
Staff Reporter
A growing number of people are opting to use credit cards for expenditure and settlements as cards offer handsome discounts and other installment benefits in times of high inflation and slow economy.
According to the Bank of Korea and the Credit Finance Association Monday, payment using credit cards accounted for 57 percent of total private spending in the first three months of this year.
The use of plastics, excluding services involving cash such as cash withdrawals and cash advance services, stood at 72.9 trillion won, while private expenditure in the first quarter reached 127.4 trillion won.
People began to increase their payments through credit cards in 2000 when card usage accounted for 25 percent, up from 6 percent, of private consumption on average during the 1990s.
It slightly dropped during the credit card bubble in 2003, but after recovery, credit purchases jumped to nearly 50 percent of private spending last year.
The central bank expects the portion of credit card expenditure to exceed 60 percent in the second quarter, as credit settlements totaled 172.2 trillion won in the first seven months of this year, up 21 percent from a year earlier.
``People are using cards to settle small payments,'' said a central bank official. According to BC Card, which has a market share of 30 percent, the settlement of small payments above 10,000 won totaled 131 million won in the first half of this year, up 46 percent from 2007. Such payments account for 19 percent of private spending, the company said.
The association noted that people are using credit cards more to pay for their children's private education, which totaled 2,150 credit settlements in the first half, up 67 percent. Credit purchases at bookstores and auto repair centers followed.
The financial authority, however, said that it would pay keen attention to the credit market as to whether its overdue payment ratio increases through payment by installment, as part of efforts to prevent defaults.