Of course, the controversy may be overdone. The trend could merely be part of South Korea's move to normal-economy status. Before the Asian crisis, its double-digit growth rates were hardly typical of the rest of the world -- nor was its financial collapse afterward. Now that Korea is vibrant again, and consumers are becoming worldlier, credit-card usage may be a sign of economic maturity.
What's troubling, though, is how quickly South Koreans have built up installment debt. Household debt rose 28 percent in 2001 to 341.7 trillion won (US$267 billion). South Korea was home to an estimated 428 trillion won worth of credit-card transactions last year.
This year, the number is expected to reach 550 trillion won.
Not only does it raise questions about the health of household balance sheets but also about South Korea's ability to keep growing at a strong pace. Consumption, at least in part, has been driven by an unsustainable surge in borrowing. If people start borrowing less, or choose to pay down debt, consumption may plunge.
Signs of trouble already are appearing. Consumer loan delinquencies rose a record 17.6 percent in 2001 to 2.45 million, according to South Korea's Financial Supervisory Commission. One million South Koreans have charged up more than 10 million won worth of revolving debt. The trend is leading to some disturbing social problems -- including murder and suicide.
It also could lead to economic troubles, too. If South Korea is in fact experiencing a credit-card bubble, authorities will have to work fast to keep it from hurting Asia's fourth-largest economy.
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