Credit Card Spending Nosedives
By Yoon Ja-young
Staff Reporter
Kim Woong-jin, an employee at a state-run enterprise, cut his monthly credit card spending by around 200,000 won recently.
``There isn't likely to be any pay rise this year, and management says around 25 percent of the workforce will be laid off. I should say that the loss from the fund investment also made me cut my spending,'' he said. He said he trimmed spending on cultural activities, clothing, and eating out.
Credit card spending has been slowing down recently after years of double-digit growth as the reality of global economic problems hits home among Koreans.
According to the Credit Finance Association, credit card bills totaled 27.15 trillion won in December, growing only 9.09 percent from a year ago, the smallest rise all year. The year-on-year growth rate of credit card spending was 21.05 percent in September, but has been plunging constantly since then as the global capital market turmoil hit the economy. The comparable rate fell to 15.23 percent in October, 9.8 percent in November and to 9.09 percent in December.
``Consumer sentiment seems to be depressed over concerns about an economic recession and the stock market downturn. When you consider the pessimistic outlook that the worst part of the recession is yet to come, credit card spending may soon hit minus growth,'' said a spokesperson at the association.
``Consumption will continue to be sluggish for the time being, with consumer sentiment indices falling since September,'' the Korea Development Institute said in a report.
Meanwhile, annual credit card billing hit a record high last year, as people turned to credit cards instead of paying in cash to get tax benefits and other perks.
According to the association, credit card use, excluding cash services and card loans, hit 300.96 trillion won last year, passing the 300-trillion-won mark for the first time, an 18.1 percent increase from the previous year. The association attributed the rise to inflation and economic recession, which made people try to take advantage of even the smallest tax benefit.