The credit boom also reflects the limitations of Korea's reformed but nonetheless dated financial system. Lump-sum and instalment purchases have risen sharply. The relaxation last September of the ceiling on advances fuelled this growth, but it also has been spurred by a personal-finance system in which cheque and mortgage services are conspicuously absent. Just under 50 trillion won was advanced last year, and a further 53.6 trillion won in the first half of this year, according to ING Barings. Since late last year, the tax service has done everything it can think of to maximize card use.
Tax deductions are available to consumers who make large credit-card purchases.
Companies can get tax benefits by submitting credit-card receipts for entertainment expenses over 50,000 won. Around 54,000 small businesses, mostly shops, restaurants and cram schools, were ordered in mid-September to start accepting credit cards or face a tax audit. The taxi industry has been put on notice that card payments will soon be introduced. The rapid rise of a card culture and the debt associated with it is starting to worry the big card companies, which have stepped up their monitoring of overdue payments. But, for the time being, overdue bills are a small blot on a ledger filled with black ink.