- Published 2026.11.06 09:18
Average rate for highest credit band hits 6.54%, far above commercial banks
Mid-to-low credit lending mandate shifts default costs onto prime borrowers
Refinancing infrastructure growth raises risk of losing rate-sensitive top-tier customers
Internet-only banks are locking in loan pricing policies that disadvantage prime borrowers for credit-line loans, known as negative bank accounts. To defend against deteriorating asset soundness from expanded lending to mid-to-low credit borrowers, they are artificially raising the spread on top-tier credit borrowers who carry minimal default risk. As the founding rationale of "rate competitiveness" fades, concerns are growing that high-credit customers, now paying more than at commercial banks, could leave in large numbers.
According to loan rate disclosures by the Korea Federation of Banks on Nov. 6, the three internet-only banks—K bank, KakaoBank and Toss Bank—charged an average rate of 7.16% per annum on new credit-line loans in September 2026. In particular, the average rate for the highest credit score band of 951–1,000, where default risk is virtually nil and the lowest funding and operating costs should apply, reached 6.54% per annum. That is 1.10 percentage points higher than the 5.44% average charged by the five major commercial banks—KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup Bank—for the same credit band.
The structural problem is bigger than the absolute rate gap. Loan rates are normally calculated by adding a spread reflecting the borrower's credit risk and the bank's margin to a reference rate linked to the base rate, then subtracting preferential rates. But internet banks have sharply raised spreads on high-credit borrowers. Since the end of last year, the average spread for the 951–1,000 credit score band at the five major commercial banks fell by 0.08 percentage point, while the average spread at K bank and KakaoBank rose by 0.59 percentage point. In effect, they are lending to their highest-credit customers with an extra margin on top.
Because of this pricing structure, the interest burden felt by high-credit borrowers has far outpaced the rise at commercial banks. KakaoBank's rate for the 951–1,000 band jumped 1.09 percentage points from 5.37% at the end of last year to 6.46% in September, and K bank rose 1.02 percentage points from 5.78% to 6.80%. Over the same period, the average rate for high-credit borrowers at the five major commercial banks rose only 0.71 percentage point from 4.73% to 5.44%. Even amid the common macro environment of rising market rates, internet banks widened the rate inversion artificially by raising spreads.
Behind this pricing lies the structural constraint of meeting mandatory mid-to-low credit lending ratios and managing asset soundness. Under financial regulator rules, internet banks must supply a certain proportion of their total unsecured credit loans to mid-to-low credit borrowers. As delinquency rates among mid-to-low credit borrowers have soared amid a prolonged economic slowdown, pressure to build loan-loss provisions has grown. The prevailing analysis is that to offset this, internet banks are attaching higher spreads to credit-line loans for high-credit borrowers—whose risk weights are low and principal recovery is certain—to preserve interest income.
The paradox is compounded by the fact that the average credit scores of new credit-line borrowers at internet banks are uniformly rising. KakaoBank's average credit score for new credit-line borrowers climbed 94 points from 809 at the end of last year to 903 in September, while Toss Bank rose 88 points from 836 to 924. K bank also showed a clear shift toward higher credit, from 932 to 958. Even though the credit risk of customers turning to internet banks has fallen sharply, the rates charged to them are approaching 7% per annum, increasing their real financing costs.
According to credit assessment principles, spreads should shrink as a borrower's probability of default falls. But the current loan rate structure at internet banks shows an abnormal pattern of shifting higher costs onto low-risk prime borrowers. In the mid-credit band of 751–800, the average spread at the three internet banks rose 0.92 percentage point from the end of last year to 4.94%, while commercial banks actually cut theirs by 0.47 percentage point—further evidence of an industry-wide strategy to expand loan margins.
As a result, the competitiveness internet banks once touted—low costs and reasonable rates—has become hard to find in the credit-line loan market. A strategy of widening deposit-loan margins on prime borrowers may support net interest margins in the short term, but over the long term it could do more harm than good. High-credit customers are highly rate-sensitive and tend to move to any financial institution offering even slightly better terms. The scale of high-credit customers leaving for commercial banks through refinancing loan infrastructure is expected to become a key indicator for gauging internet banks' future profitability and the reliability of their credit assessment models.
※ This article is an AI translation of the Korean original published by Korea Credit News; it was checked by automated quality guards and published by the English edition desk.
