The Purpose of the Credit Card Cashing 95% Guarantee: Supporting Low-Credit Borrowers

Hello, and welcome to KingCreditWeb. If you’re an analyst tracking the South Korean market, you’ve likely encountered data points that make you pause. Today, we’re diving into one of those cryptic signals: the search term 신용카드 현금화 95.

At first glance, it looks like a jumble of keywords. “Credit card cashing” next to the number “95.” What could it mean? Is it a new fintech product? A high-yield cash-back scheme? The truth is far more complex and reveals a critical intersection of financial desperation, government policy, and a dangerous misunderstanding. This isn’t just a search query; it’s a window into the immense pressure facing South Korea’s most financially vulnerable consumers. They are caught between a rock and a hard place, and this search term is the map of their predicament. Let’s unpack this together, question by question, to understand the real purpose behind the “95” and why it gets confused with a risky, illegal act.

First off, what is the “95%” really referring to?

Let’s clear the air immediately. The “95” has absolutely nothing to do with getting 95% of your credit limit back in cash from some third-party service. In fact, that idea is a direct path to the illegal world of “card cashing,” which we’ll get to shortly.

The “95” actually refers to a 95% government guarantee on specific policy loans designed for financially struggling individuals.  

Think of it this way:

• A person with a low income and a poor credit history walks into a bank asking for a loan. Under normal circumstances, the bank’s risk assessment would flash red, and the application would be denied.
• However, on certain government-backed products, an agency like the Korea Inclusive Finance Agency (KINFA) steps in and tells the bank, “Go ahead and issue the loan. If the borrower defaults, we will cover 95% of your loss.”

This guarantee is the entire point. It’s a powerful incentive that fundamentally changes the bank’s risk calculation. It persuades them to lend to a segment of the population they would otherwise never touch. The borrower gets a much-needed loan, and the government absorbs the majority of the risk, all in an effort to keep people within the regulated financial system.

So, who are these 95% guarantee loans designed to help?

These programs are not for the average consumer. They are a targeted intervention for those who are systematically excluded from mainstream finance. The eligibility criteria paint a clear picture of the intended recipient:

• Low Income: Applicants typically must have an annual income below 45 million KRW (approximately $32,600 USD).  
• Low Credit Score: These loans are often reserved for individuals with a personal credit score that places them in the bottom 10% or 20% of the population.  
• Proven Need: In many cases, an applicant must show they have already been rejected by other, more standard policy loans. For example, the “Special Guarantee for Lowest-Credit Borrowers” is specifically for those who couldn’t even qualify for a regular Sunshine Loan
• This is the financial safety net’s last line of defense. It exists because of the immense economic pressure on Korean households. With a household debt-to-GDP ratio that stood at 91.7% at the end of 2024 far exceeding the OECD average of around 60% a significant portion of the population is living on a razor’s edge. When an emergency strikes, they have nowhere to turn, which brings us to the dangerous side of our search query.  

If the 95% is a government program, why the link to “Credit Card Cashing”?

This is where a simple misunderstanding becomes a potentially life-altering mistake. A financially desperate person hears whispers of a “95% loan” available for people with bad credit. Separately, they see online ads for credit card cashing, an illicit but well-known method for getting quick cash. In their mind, the two concepts collide. 

What “Card Cashing” (kard-kkang) Actually Is: 

This practice involves a user making a fake purchase at a colluding merchant. For instance, you “buy” $1,000 worth of non-existent goods on your credit card. The merchant gives you back $800 in cash and pockets a hefty 20% commission. From the credit card company’s perspective, it looks like a normal sale. This is a criminal act, a direct violation of the Specialized Credit Finance Business Act, and carries penalties of up to three years in prison.  

• The Futile Search for Legitimacy: This confusion often leads to a follow-up search: verifying a credit card cashing company. This is a tragic exercise in futility. There are no legitimate operators to verify; they are all unregistered and illegal. Any attempt to “check” them is simply choosing which predator to engage with.  

Is the 95% guarantee program a flawless solution then?

Not exactly. While its purpose is noble, the program’s design creates a significant and well-documented side effect: moral hazard.

Because the government guarantees 95% of the loan, the lending bank has very little “skin in the game.” Their incentive to perform rigorous due diligence on the borrower’s ability to repay is dramatically reduced. If the loan goes bad, the bank only loses 5 cents on the dollar.

This has led to some alarming outcomes:

• A study by the Korea Development Institute (KDI) found that increasing the guarantee ratio from 85% to 95% caused the probability of the loan defaulting to jump by 31 percentage points.  
• For the “Special Guarantee for Lowest-Credit Borrowers” program, financial authorities have had to revise the projected default rate for 2025 upwards to a staggering 53.5%.  

This presents a brutal policy dilemma. Does the government accept a default rate of over 50% as the cost of preventing vulnerable people from turning to loan sharks? Or does it tighten the criteria and risk pushing those same people into the very shadow market it’s trying to eliminate? For now, the answer seems to be the former.

How does this fit into Korea’s broader strategy?

The existence of both the 95% guarantee and the confusion around 신용카드 현금화 95 makes perfect sense when you view it as part of a two-front war against illegal private finance.

Front #1: Aggressive Crackdown and Enforcement The South Korean government is not passive. A multi-agency task force is actively working to dismantle the illegal lending market. The results are tangible:

• From January to November 2024, police arrests related to illegal private finance surged by 39% compared to the previous year.  
• The seizure of criminal proceeds in the same period increased by an incredible 4.6 times, reaching 16.9 billion KRW (approx. $12.2 million USD).  
• Authorities are using technology, including AI-powered Fraud Detection Systems (FDS), to monitor transactions in real-time, block suspicious mobile payment cash transfers, and shut down illegal online ads.  

Front #2: Expanding the Legitimate Safety Net The government understands that enforcement alone is not enough. You cannot eliminate demand for emergency cash simply by making the supply illegal. You must provide a viable alternative. This is the core purpose of policy finance.

• The annual supply of these government-backed loans has steadily increased, reaching 10.6 trillion KRW (approx. $7.7 billion USD) in 2023.  
• A wide array of products exists under the “Sunshine Loan” umbrella, each tailored to a specific need, from “Sunshine Loan 15” to the “Special Guarantee” for those with the absolute lowest credit scores.  

The 95% guarantee is the engine that makes this second front possible. It is a deliberate policy choice to absorb high risk in order to provide a critical off-ramp for citizens before they turn to crime out of desperation.

Final Thoughts for the Analyst

신용카드 현금화 95 a narrative. It tells a story of a country grappling with one of the highest household debt ratios in the developed world, and a government deploying a complex, costly, and sometimes controversial strategy to manage the fallout. The 95% guarantee is not a perfect tool the high default rates are a testament to that but its purpose is clear and critical: to support low-credit borrowers by keeping them within the bounds of the legal financial system. It is a calculated risk aimed at preventing a much worse outcome. Understanding this dynamic is key to understanding the real pressures shaping the South Korean consumer economy from the ground up.

For a deeper dive into financial strategies and understanding the credit landscape, continue exploring our resources at kingcreditweb.com.