S. Korean consumers increase card spending in May amid high prices

[Photo by Yonhap]

South Korean consumers, left with no viable alternatives to cope with rising living costs, increased their card spending last month, while businesses tightened their belts and reduced unnecessary card expenditures.

According to data released on Thursday by Credit Finance Association, individual card spending in May amounted to 84.1 trillion won ($60.6 billion), up by 2.9 trillion won from 81.2 trillion won a year ago. In stark contrast, corporate card spending fell by 2.5 trillion won over the same period.

The trend of increasing card spending among individuals has been consistent. Monthly data from January to May of this year shows a rise in spending compared to last year. Notably, in January of last year, individuals spent 76.9 trillion won, whereas this year, they spent 82.8 trillion won, up 5.9 trillion won.

While the total card spending has risen, there is a notable decrease in the average amount spent per transaction. Last month, the average transaction amount for individual cards was 35,449 won, down from 35,712 won a year ago. This suggests that consumers are trying to find more affordable options amid high inflation.

“Despite rising prices and sluggish economic conditions, individuals cannot significantly reduce their basic consumption needs. In contrast, companies can cut unnecessary expenses, which accounts for the observed difference in spending behavior,” said an official from the card industry.

However, the overall card approval amount last month saw a slight increase, primarily driven by a rise in the use of debit cards, which are favored by individuals. The total card approval amount in May was 102.9 trillion won, up 0.4 percent from 102.6 trillion won a year earlier, While credit card approvals fell by 1.2 percent, from 81.3 trillion won to 80.3 trillion won, debit card approvals rose by 2.9 percent, from 21.1 trillion won to 21.7 trillion won.