What it is
Called a 'minus account' because the balance shows below zero, it is a bank line of credit tied to your everyday account. The idea dates to 1728, when the Royal Bank of Scotland granted a merchant 'cash credit' beyond his balance. In Korea it became the go-to salaried-worker loan, until a surge in borrowing for stocks and housing led regulators to tighten credit loans in November 2020 and, in October 2021, to extend borrower-level DSR limits to anyone with over 200 million won of debt from January 2022 and over 100 million from July 2022 (Financial Services Commission, 2021).
How it differs from a regular loan
Interest accrues daily only on what you draw, but it is usually added to the negative balance rather than paid separately, so it compounds (Stango & Zinman, 2009). Rates are typically a bit higher than a lump-sum personal loan, and the term is usually one year with re-review at renewal.
Why balances creep up
Thaler's (1999) mental accounting explains why a minus in your everyday account doesn't feel like a loan; Laibson (1997) showed that easy access undermines saving; Gross and Souleles (2002) found higher limits bring more debt. Zinman (2015) and Agarwal et al. (2009) document recurring borrowing mistakes, especially among the young and old.
Using it wisely
- Set the limit you need, not the maximum.
- Pay down the balance first when a lump sum arrives.
- Watch rate rises tied to the base rate and your credit score.
FAQ
- Does an unused limit hurt?
- It can count toward DSR when you apply for other loans.
- Should I close it?
- If a large loan is coming, shrinking or closing it may help.
Sources reviewed: 2026-11-02
References
- Zinman, J. (2015). Household debt: Facts, puzzles, theories, and policies. Annual Review of Economics, 7, 251–276. Survey of what we know about household borrowing.
- Agarwal, S., Driscoll, J. C., Gabaix, X., & Laibson, D. (2009). The age of reason: Financial decisions over the life cycle and implications for regulation. Brookings Papers on Economic Activity, 2009(2), 51–117. How financial mistakes vary with age.
- Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 112(2), 443–478. Why easily accessible credit undermines saving.
- Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12(3), 183–206. Mental accounting explains why a negative balance doesn't feel like debt.
- Gross, D. B., & Souleles, N. S. (2002). Do liquidity constraints and interest rates matter for consumer behavior? Evidence from credit card data. The Quarterly Journal of Economics, 117(1), 149–185. Higher credit limits lead to more borrowing.
- Stango, V., & Zinman, J. (2009). Exponential growth bias and household finance. The Journal of Finance, 64(6), 2807–2849. People underestimate how fast interest compounds.
- 금융위원회. (2021). 「가계부채 관리 강화방안」 발표 [보도자료]. Korea's 2021 household-debt tightening plan.