A young man's tale of oweA piece of plastic just 5.4 centimeters by 8.5 centimeters can be a pain in the neck for young adults. Take Nam Seung-ho, who graduated from an elite university last year and has been working for a high-tech start-up company for one month.
At a glance, Mr. Nam, 26 looks like a typical yuppie. He likes luxuries; he's always dressed in a sharp suit and tie, eats at nice restaurants and buys brand-name goods at department stores. On a recent Friday evening, Mr. Nam got together at a bar in Sinchon, Seoul with his best friends from college. After the revelry, he got up and took out his credit card to pay the bill. "No!" his friends cried out in a panic, before they all chipped in cash to pay the tab. "Using a credit card again is like digging your own grave," Mr. Nam was told by his closest friend, Lee Hyun-jong. "You know that a lot better than I do."
Until recently, Mr. Nam's life was going down the tubes. "From last summer to this February was the worst time of my life," he told the JoongAng Ilbo English Edition. Early last year, he was packing seven credit cards, though he was just out of college and jobless, and running up debts.
Mr. Nam's credit-card fiasco began in January 2001 on the day he had a job interview at LG. On his way to the interview room he came upon a stack of applications for an LG credit card. "It looked like a requirement for the interview," he said. "I didn't have a chance at the job, and I was like a drowning man catching at a straw." Getting a credit card was easy, he said. All he needed was his citizen identification card, and nobody checked his credit history. The same thing happened when he interviewed at Samsung, and he had two cards ?but still no job.
Mr. Nam likened credit cards to drugs. "Once you start using them, you just keep using them on and on if you don't have a strong sense of self-control," he said. Unfortunately, Mr. Nam did not have much willpower when he started his habit. To make matters worse, it was easy to get more credit cards. Each company was engaged in heated competition to sign up new cardholders, and came up with plenty of promotions to attract more clients.
The credit-card business is one of the hottest local business sectors right now; it took in earnings of 475.5 billion won ($363 million) in the second half of last year. Seven payment card companies and 19 banks have credit card operations.
Mr. Nam couldn't resist the promotions. Around his residence, which is near a university campus, a flock of credit card pushers would have stands set up, offering gifts like alarm clocks or stuffed animals. Some even gave 10,000-won bills to people who signed up. Mr. Nam casually picked up another and another until he had five cards in his wallet. Then he got two more from his aunt, who worked as a promoter for several credit card companies. She got 50,000 won for each person she signed up. The seven cards would have done no harm ?if he could have controlled himself.
But Mr. Nam started to let himself go. "Everything was so easy with the magic plastic," he said, lighting a cigarette. First he used his credit cards to buy an interview suit. Then he started buying more brand-name clothes and eating at fancy restaurants more often. In due course, as he realized that he was unable to keep up with the payments, some of the card companies cut him off. The companies began to threaten legal action against him.
"The companies were as pitiless when I was in the hole as they were kind when I first got their cards," Mr. Nam said. With the few cards that were still valid, he got cash advances to cover his expenses, and the hole got deeper and deeper. Eventually he became distraught and withdrew from life. "I even tried to commit suicide," he said. Some of his friends began to drop him because he showed no signs that he meant to improve his situation. But his close friends stuck by him.
If you owe more than 50,000 won on a credit card for more than three months, you go on a blacklist administered by the Korea Federation of Banks. Mr. Nam's name was on that list soon enough. And he owed much more than 50,000 won; he was about 8 million won in the red.
Once on the list, you are denied any new credit. Also, employers have access to the list, so it can keep you from getting a job. Once you pay off the debt, the payment is noted on the blacklist, but your name remains on the list for a year. Mr. Nam, whose parents passed away when he was young, was lucky to have good friends like Mr. Lee, the pal at the drinking party. They got loans from banks and lent the money to Mr. Nam so he could pay off all the cards all at once.
Mr. Nam is also lucky considering that more than 400,000 persons on the blacklist are in their 20s. According to Kim Byung-tae, the head of the loan business supervision team at the Financial Supervisory Service, credit card users in their 20s are at particular risk. "We don't see a problem with credit card users who are underage," he said. "Their numbers are falling because it's clearly against the law; but it's harder to put solid measures in place to stop people in their 20s from getting into dangerous levels of debt."
A bank in Busan is trying to help young people in debt (or taking advantage of them, according to your point of view). Last month, Hanmaum Savings and Finance said it would provide up to 2 million won in loans to persons on the blacklist who are in their 20s. The loans have a three-year term but carry interest rates of up to 60 percent. College students who take the loans but don't have any regular income have to take jobs that the bank assigns them.
Once you are branded with the "scarlet letter of the blacklist," it's like capital punishment, Mr. Nam said. "I still use two credit cards, and I have to admit that sometimes I feel driven to use them even when it's unnecessary. But I think that what I went through was costly enough. There is even a saying that if you're blacklisted, you're disqualified for marriage; and if you're married, you'll have to get a divorce."
by Chun Su-jin