K-Culture Unfolded

1. The South Korean Credit Card Crisis of the Early 21st Century In 2002, nearly five years after South Korea had emerged from the 1997 foreign exchange crisis, the nation faced its first economic challenge of the 21st century, plunging millions into credit delinquency . The crisis, often referred to as the "2002 Card Crisis" or "LG Card Crisis" due to the collapse of then-market leader LG Card, wreaked havoc on Korea's economy and society through 2006. 2. Background to the Crisis The administration under President Kim Dae-jung, which began in 1998, sought to rejuvenate the economy post the foreign exchange crisis and simultaneously clamp down on prevalent tax evasion . The government promoted credit card use to boost consumption and reduce tax evasion through cash transactions, significantly relaxing regulations around credit cards.  From enabling higher cash withdrawals on credit cards to introducing income tax deductions and receipt lottery systems, credit c...

  Credit Card Loan Delinquency Rates Hit 3.4%, Highest in a Decade In Seoul, Kim, a 33-year-old cafe owner, recently received a text message from a credit card company notifying him of a loan delinquency. Last year, he borrowed 10 million won at an interest rate of 15%, but has been unable to make timely payments due to a decrease in cafe sales. Several large offices near the cafe relocated or closed, significantly reducing customer traffic. Kim mentioned, "I'm considering shutting down the business." As high interest rates and inflation persist, the financial strain on ordinary households is intensifying. Credit card loans and emergency loans from internet banks, often sought by those in urgent need of money or those with medium to low credit ratings, are seeing a rapid increase in delinquencies. Credit Card Loan Delinquency at Banks Hits Decade High According to the Bank of Korea, as of the end of February, the delinquency rate for credit card loans (excluding banks wit...