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Delinquency soars among 20s as youth are trapped between debt and joblessness

Published: 18 Oct. 2025, 14:35 Updated: 18 Oct. 2025, 16:21

JIN MIN-JI
[email protected]

An advertisement related to credit card loans in Seoul on July 24 [YONHAP]

The delinquency rate on bank loans among people in their 20s was the highest of all age groups, as more young borrowers turn to illegal private lenders to cover unpaid debts.

The average delinquency rate - delinquent in principal or interest for more than one month - on household loans for people in their 20s stood at 0.41 percent as of the end of the first half of this year, according to data titled “Household Loan Status by Age Group” from the five major commercial banks — KB Kookmin, Shinhan, Hana, Woori and NongHyup — on Friday.

This was the highest among all age groups.

The outstanding balance of household loans among people in their 20s was 34.57 trillion won ($24.69 billion), the lowest of all age groups.

But signs of insolvency were pronounced. Compared to the end of the first half of last year, the average delinquency rate for people in their 20s rose by 0.02 percentage points.

By age group, the size of household loans was 221.14 trillion won for those in their 40s, 195.49 trillion won for those in their 30s, 172.28 trillion won for those in their 50s and 132.19 trillion won for those in their 60s and older.

Delinquency among those in their 20s mainly occurred in unsecured credit loans.

At one of the five major commercial banks, the delinquency rate for unsecured loans among individuals in their 20s and under stood at 0.8 percent as of July, significantly higher than that of other age groups, which ranged between 0.37 percent and 0.62 percent.

Young people who fall behind on bank loan payments are increasingly being driven to secondary financial institutions with relatively high interest rates — or to even illegal private lenders.

According to a survey on low-credit individuals released by the Korea Inclusive Finance Agency in June last year, 10 percent of respondents in their 20s and 30s said they had experience using illegal private loans.

This figure has been steadily rising from 7.5 percent in 2022 and 9.8 percent in 2023.

Experts point out that behind the recent incidents of youth abduction and confinement in countries like Cambodia lie issues of youth unemployment and economic hardship.

In particular, some low-credit individuals or economically unstable young workers are being deceived by phrases such as “high-income job,” “overseas IT work” or “debt relief” and becoming involved in illegal activities such as voice phishing or romance scams.

According to the employment trend report released by the Ministry of Data and Statistics in September, the number of employed individuals aged 15 to 29 decreased by 146,000, compared to a year earlier.

At the end of last year, data from the Bank of Korea showed that among those classified as taking breaks — neither working nor seeking work — 3 out of 10 were young people aged between 25 and 34, an increase of 86,000 people over the year.

“As the job market continues to dry up and prices rise, young people are unable to repay their debts and are falling into the trap of high-interest illegal lending, creating a vicious cycle,” said a financial authority official.

“There is a need for both a social safety net to protect them and a systematic education system in economic and financial literacy,” the official added.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY KIM SUN-MI [[email protected]]