More than 30 percent of people younger than 30 turn to high-interest loans

By Lee Kyung-min

More than 30 percent of people younger than 30 years of age turn to high interest loans, as the credit market is not inclined to provide them with necessary funding, according to a report from the Bank of Korea Tuesday.

“Interest rates of lower than 10 percent from banks are not available for them, so few options are left.

"They then turn to the familiar ads on TV, and on the Internet, which link to those markets,” said BOK in a report.

Along with young people, those in dire straits financially also turn to such resources, it analyzed.

They need the money to just put food on the table, the report added.

The situation is driven by bank policies, it said.

Profit-driven banks are reluctant to lend money to the financially insecure since they are deemed less solvent than the average debtors.

A debtor in the fifth bracket in credit rating has to pay 16.2 percent in interest, whereas one in seventh bracket has to cough up 21.8 percent.

Almost a third in Korean households resorted to usury, data showed.

More than half of credit card users _ 52 percent _ and 80 percent of those who resort to capital companies and savings banks are now paying more than 20 percent in interest rate.