Adjustment ahead of top rate cut

The interest rate on credit card companies’ cash services (short-term loans) is falling ahead of the statutory high interest rate cut, which is believed to have been adjusted by credit card companies ahead of the current 24% to 20% cut in the highest interest rate.

According to the credit finance association’s announcement on the 4th, the average interest rate (operating price) of cash services based on the standard rating of seven full-time credit card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, and Hana) as of the end of March was 17.90 ~ 19.19%. The average value of the seven companies was 18.58%, down 0.36% from the average of 18.94% at the end of December last year.

All seven companies saw their average interest rates fall by 0.03 percentage points for three months and 1.13 percentage points for as many. In particular, HyundaiCard lowered its average interest rate by 1.13% from 19.03% at the end of last year to 17.90% at the end of March this year. 폰테크 Lotte Card also fell 0.54 percentage points in the same period, and Hyundai Card explained that it lowered its own interest rate before the statutory highest interest rate cut.

The card company with the highest average interest rate on cash services was KB Kookmin Card, which recorded 19.19%. Hana Card (19.08%) also maintained the interest rate of 19% after last year. Samsung (18.83%), Woori (18.49%), Shinhan (18.36%), and Lotte Card (18.23%) followed.

In the case of first and second grade high-end creditors, Woori Card provided the highest interest rate at 15.32%, while Hana Card had the lowest interest rate at 11.7%. For low-end 9-10-grade users, interest rates were close to the statutory high of 24%. Samsung Card lent money at the highest interest rate of 23.59%, and Woori Card, which provided the lowest interest rate to low-income users, also recorded 20.24%

The move to cut the cash service rate has also had the impact of a cut in the highest interest rate, but it is pointed out that it is a credit card company’s hard work to secure cash service customers. It is said that interest rates are higher than loans such as card loans (long-term loans) and Internet banks, and that they are no longer superior in terms of convenience, and they are forced to take measures to cut interest rates.

Actual cash services have a 5 to 6 percent higher interest rate than card loans. As of the end of March, the average interest rate of card loans of seven full-time card companies was 13.21%, but cash services were 18.58%, 5.37% higher.

According to the Bank of Korea’s economic statistics system, credit card companies’ personal use of cash services reached 4.20 trillion won as of the end of February. The figure is the lowest since 2003, down 16.8 percent from the previous year (4.83 trillion won). The amount of cash service usage, which reached 26 trillion won in 2003, has decreased to 4 trillion won in 18 years.

In the future, the use of cash services is expected to decrease. Cash service customers have a lower credit rating than card customers, which is inevitably affected by the highest interest rate cut in the court. According to the actual credit association, as of the end of March, the percentage of cash card users using seven full-time credit card companies with an annual interest rate of 20% or more soared by nearly 50%. Hana Card accounted for 60.46% of the total, followed by Hyundai Card (56.52%) and KB Kookmin Card (54.92%).

An industry official said, “We are adjusting the interest rate on cash services ahead of the highest interest rate cut in the court.” As more and more services compete with cash services such as FinTech, we have to use the means to cut interest rates to secure customers with cash services. “He said.

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