The Harms of Social Media Addiction: 70% of Emergency Funds Loans Delinquent, MZ Generation Drowning in Debt.

In today's society, obtaining loans has become increasingly convenient through internet-only banks, and the MZ (Millennials & Generation Z) generation is taking advantage of this trend. However, the ease of access to loans has come with a rising trend in loan delinquencies, leading to increased financial burdens. In this article, we will explore the issue of emergency fund loan delinquencies at internet-only banks, the background behind this problem, and the importance of being cautious about loans.

 

While loans through internet-only banks offer convenience and quick accessibility, indiscriminate borrowing has led to a surge in delinquency issues.

 

According to Yun Young-deok, a member of the National Assembly's National Policy Committee, as of the end of August 2023, the outstanding balance of emergency fund loan delinquencies at internet-only banks has reached a significant amount. The combined cumulative delinquent amount for the three major internet banks—Kakao Bank, Toss Bank, and K Bank—is as high as 20 billion KRW.

 

Surprisingly, the 20-30-year-old generation accounts for a significant portion of these delinquencies. They have borrowed 140 billion KRW, representing 70% of the total delinquent amount. Among these, Kakao Bank holds 123 billion KRW (71%) out of its 175 billion KRW delinquent balance, Toss Bank has 8.55 billion KRW (71%) out of 12 billion KRW, and K Bank holds 7.82 billion KRW (60%) out of 13 billion KRW.

 

Internet-only banks offer emergency fund loan products ranging from 500,000 KRW to 3 million KRW, characterized by simple document submission and assessment processes. However, this convenient lending method comes with high-interest rates, with annual interest rates as of September 13th, standing at around 4.79-15.00% for Kakao Bank, 6.24-15.00% for Toss Bank, and 6.01-15.00% for K Bank.

 

In light of this situation, caution with loans is essential, especially as delinquencies among young adults are on the rise. Given the anticipated economic challenges, such as high-interest rates, rising prices, and economic downturn, precise and selective financial support policies are needed at the government level.

 

While loans through internet-only banks offer convenience and quick accessibility, indiscriminate borrowing has led to a surge in delinquency issues. For the MZ generation and all those preparing for the future, it is important to make careful decisions about loans and establish responsible repayment plans. With these efforts, along with support from the government and financial institutions, a promising economic future can be built.