Credit Card Spending Sets New Record
By Na Jeong-ju
Staff Reporter
Credit card spending soared to a record high in March as more consumers used cards to settle bills, instead of cash, the association of card firms said Wednesday.
Card spending jumped to 25.8 trillion won in March, up 25.5 percent from a year ago. This is compared with 24.9 trillion won in December last year, 23.7 trillion won in January and 21.9 trillion won in February, according to the Credit Finance Association (CFA).
The card spending in March recorded the largest amount since the association began compiling the data in 2003.
The CFA said it is difficult to say the rise in card spending is an indication of recovery in consumption as it is mainly because of a rise in the number of card users. The consumer confidence index fell to its lowest level in 23 months in March as more consumers turned pessimistic about their living conditions this year due to growing costs, the National Statistical Office said Monday.
``An increasing number of consumers favor cards over cash as card firms have increased benefits for subscribers,'' a CFA official said. ``You should not jump to a conclusion that consumers spent more in March. Rather, it reflects a change in the manner of consumption.''
However, the sharp growth of card bills has alerted policymakers and regulators here amid worries that the country may suffer a credit crunch like the United States.
The Bank of Korea, however, has downplayed such concerns, saying Korean lenders have a limited portion of riskier mortgages. Steep falls in home prices are unlikely to occur here as banks have toughened lending regulations for borrowers to keep default rates low, it said.
The central bank said a total of 87.2 million credit cards were issued as of the end of last year, down 5.7 percent from 92.5 million a year earlier. This is because banks and card issuers cleaned up many dormant credit cards.
Spending through cards came to 162 trillion won in 2003, but has risen steadily to 164 trillion won in 2004, 192 trillion won in 2005, 222 trillion won in 2006 and 255 trillion won in 2007, according to the CFA.