By Kang Seung-woo
Korea’s credit card spending is on pace this year to surpass 500 trillion won ($453 billion) for the first time since 2002, data showed Monday.
Credit card spending in the first half of this year amounted to 261.7 trillion won, up 10 percent from 239.1 trillion won from a year earlier, according to industry data.
Given that last year’s total spending by credit cards was 493.8 trillion won, the current rate of usage is expected to result in card spending easily passing 500 trillion won at the end of 2011.
The pre-estimated figure is the highest since the record 622 trillion won tallied in 2002, a year ahead of the credit card crisis which involved more than three million people defaulting on their credit card payments.
“The amount of card spending for this year will easily surpass 500 trillion won, considering that it sharply takes off in the second half because of the vacation season and a long weekend,” said an official of the credit finance industry.
Spending on plastic, which managed to reach 13.3 trillion won in 1991, broke the 100 trillion won mark with 224.9 trillion won in 2000, followed by 398.1 trillion won in 2007, 445.3 trillion won in 2008 and 454.3 trillion won in 2009.
The convenience of swiping cards rather than paying in cash has led to a steady growth in spending.
According to the industry, the ratio of credit purchases to household spending came to a record 60.1 percent in the first six months of the year, a huge rise in comparison with 5.6 percent in 1991.
Soaring card spending has been coupled with complaints about card issuers.
Angered by hefty fees, small retailers staged a large-scale rally and political circles and civic groups pressed firms to cut their commission rates.
Along with the rise in credit card spending, rising issuance is a headache to policymakers, as the nation’s household debt is ballooning.
The number of credit cards rose nearly 5 percent in the first half of the year from six months earlier and the financial regulator is seeking to limit credit card companies’ total assets, new card issuances and marketing costs in an effort to curb mounting household debt.
The nation’s household debt reached 876.3 trillion won at the end of the second quarter.