[EDITORIALS]Just what they deservedFor the first time, and not a moment too soon, credit card companies have been penalized for their role in pushing households into debt. The penalties handed out to credit card companies for soliciting minors was something they deserved. But the problems may not end there.
The Financial Supervisory Committee sanctioned the Samsung, LG and Korea Exchange Bank card companies; they are barred from adding more members for varying periods of time. According to the results of a special investigation by the committee, there are serious problems in the industry.
Eight independent credit card companies and 17 bank-owned card firms had issued credit cards to 400 underaged people who had no income source and were unqualified for credit. They also issued credit cards to 1,800 minors without notifying their parents.
Some firms had repeatedly engaged in such illegal activities despite warnings they had received in the past.
The heated competition among card companies is grooming a generation of bad credit risks. Last year, the delinquency rate for cash advances received through credit cards was 7.4 percent, much higher than the bank delinquency rate for consumer loans, 1.2 percent. About 2.5 million people are behind on credit card payments; 400,000 of them are in their 20s. There are also about 12,000 minors with bad credit ratings. Last year, accumulated consumer debt amounted to 342 trillion won ($260 billion), an increase of 28 percent from the previous year. Among that debt, 20 trillion won was in cash advances and other credit card-related borrowing.
Considering those figures, the government's punishment is only fitting. In the future, these stringent measures should be continued to stop illegal operations by credit card companies. Nevertheless, the government has to be careful not to strengthen its regulation of credit card usage to the point that it damages the original intention to establish a tax-transparent society by encouraging card ownership. Credit cards have become an essential part of people's lives; they are an important part of the domestic economy. Government policy should consider all these factors.