One in four credit cards goes unused

One in every four credit cards issued in Korea is not in use as heated competition among credit card firms has resulted in excessive card issuances, data showed yesterday.

The number of credit cards unused for payments for 12 months reached 32.9 million as of end-June, up 1.66 million from six months earlier and 25 percent of the 122.3 million cards outstanding, according to the data by the Financial Supervisory Service and the Credit Finance Association.

The number of dormant credit cards has been on the rise since 2008, when it hit 25.7 million, with the figure expected to surpass 35 million by the end of this year.

Industry watchers said excessive competition among credit card companies has led to the increase of idle plastic money, only leaving the firms with more profits from annual membership fees.

Given the minimum annual fee for credit cards is 10,000 won ($9.30), credit card issuers can fetch a combined 150 billion won from unused cards, they said.

In a bid to prevent excessive card issuance, the FSS, the country’s financial watchdog, made it compulsory for credit card firms to require card users to pay the annual fee, following the country’s credit card bubble in 2003.