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S. Korea's domestic credit card spending falls in May

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Published : 2014-07-22 11:15
Updated : 2014-07-22 11:15

South Korea's domestic credit card spending by individuals dropped in May for the second consecutive month due to April's deadly ferry sinking that hurt consumer sentiment, central bank data showed Tuesday.

Credit card spending by individuals fell 1.6 percent to 30.5 trillion won (US$29.7 billion) in May, from 31 trillion won a year earlier, according to the Bank of Korea. The data does not include cash services and overseas spending.

It is the first time that the amount contracted year-on-year for the second consecutive month since the central bank began compiling the data in December 2009.

Experts attributed the on-year decline to the sinking of the ferry Sewol on April 16 that left more than 300 people dead or missing.

"The private spending growth, which has slowed since the third quarter of last year, is projected to worsen in light of the Sewol ferry incident," Lee Jun-hyup, a senior researcher at Hyundai Research Institute, said. "The private spending is expected to be very bad in the second quarter."

The latest figure is expected to have affected domestic consumption in the second quarter as individuals' credit card spending amounted for 51.2 percent of private consumption last year.

Various data have reflected dampened consumer sentiment and slowing economic activities in Asia's fourth-largest economy in the weeks following the tragedy as traumatized people refrained from shopping and leisure activities amid nationwide mourning.

The average amount of debit card settlements fell to the lowest level in June, to 24,910 won per transaction, according to the Credit Finance Association.

In May, debit card payments at convenience stores and supermarkets rose to 50.2 percent and 68.6 percent, respectively.

"The debit card has become popular among other payment methods," the association said. "The ratio of debit card payment at convenience stores and supermarkets, which mainly accept small payments, has increased."

The increased payments of debit cards, which take money directly from the cardholder's bank account, comes as the government has encouraged spending on debit cards through tax incentives, while tightening credit card rules to reduce the country's record-high household debt. (Yonhap)

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