Credit card loans have risen sharply to reach an all-time high this year as banks have tightened lending and small businesses have suffered financial difficulties amid weak domestic demand, officials said.

Loans extended by eight major credit card firms reached 44.67 trillion won ($34.05 billion) during the first eight months of 2024, surpassing the total amount for all of 2023, which stood at 41.55 trillion won, according to data from the Financial Supervisory Service and released by Rep. Kang Min-Kuk of the ruling People Power Party.

It was also the largest-ever amount for any eight-month figure since the FSS began compiling the relevant data in 2003.

The amount of credit card loans has been on a constant rise over the past several years, increasing from 35.03 trillion won in 2019 to 37.26 trillion won in 2020, 38.75 trillion won in 2021, and 39.66 trillion won in 2022.

The growth came as cash-strapped people turned to card firms to borrow money as banks have raised loan interest rates and tightened lending recently in line with the government's call for strictly managing loans to curb surging household debts.

The delinquency rate on card loans has also risen to 3.1 percent as of the end of August, up from 2.4 percent at the end of 2023.

The amount of overdue loans has also grown markedly to 1.37 trillion won as of the end of August, from 860 billion won in 2022 and 983 billion won in 2023.

"Self-employed people and small businesses are believed to have taken up a large share of the card loans. They've suffered difficulties due mainly to high interest rates and weak domestic demand," a card firm official said.

The number of reported business shutdowns reached a record figure of 986,487 last year, and around 75 percent of total businesses reported less than 1 million won in their monthly income in 2022, according to government data. (Yonhap)