South Korea’s financial regulators have issued new rules to govern credit card issuance to stem what many experts say is a vulnerable card market.
Credit card issuers must assess potential cardholders’ ability to pay off card loans based on disposable income instead of salary income, the Financial Services Commission announced on April 18.
Under commission rules, effective May 1 consumers with bad credit no longer may hold a credit card, a spokesperson from the commission tells PaymentsSource.
The revision in rules has been made necessary by the increasing number of credit cardholders piling up excessive card debts that they cannot repay and eventually default, he adds.
Korea’s card market has been building, as the number of credit cards issued surged to 122.1 million at the end of 2011, up from 96.2 million at the end of 2009, the spokesperson said. Each Korean held an average of 4.9 credit cards last year, spending an average of 5.5 million won (US$4,800 or 3,600 euros) per card, a sum that is worrisome the regulator, he says.
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