Issuers may lose as cards gather dust
The number of active credit cards that have not been used for over a year reached 23.8 million as of October, accounting for 20 percent of all those issued but not yet expired in Korea, according to statistics provided by the Credit Finance Association of Korea yesterday.
According to Statistics Korea, 92 percent of the nation’s economically active population of 25.8 million people had not used at least one of their cards for 12 months as of October.
Market observers and financial regulators say this shows how issuers have been handing out cards with greater abandon in a bid to stay afloat or expand their market share amid fierce competition. “We estimate that most white-collar workers have one or two cards they never use,” said an employee at a local credit card firm.
Among independent credit card companies, Shinhan Card, which leads the domestic market, had the highest number of unused cards over the last year (5.09 million cards), followed by Samsung Card (2.85 million), Hyundai Card (2.81 million) and Lotte Card (2.49 million).
Relative to the total number of cards issued, Hana SK Card had the highest share of dormant cards as these accounted for 26.7 percent, trailed by Lotte’s 23.1 percent, Samsung’s 21.8 percent and Hyundai’s 20.8 percent.
Among credit card business units run by local banks, Woori Bank had the highest portion of recently unused plastic with 1.71 million cards.
NH Nonghyup Bank was next with 1.14 million, followed by Korea Exchange Bank’s 950,000, Industrial Bank of Korea’s 700,000 and Citi Bank’s 540,000.
Market observers said companies need to exercise greater discretion in issuing new cards as those that are unused cause them losses given that it costs around 15,000 won ($13.82) to issue a card including transaction fees.
Many issuers are already scrambling to make ends meet as the government recently forced them to lower their transaction fees for mom-and-pop stores as part of the push for shared growth.
They said the number of unused cards is likely to fall next year as the Financial Supervisory Service will make issuers notify subscribers by e-mail or postal mail one month ahead of their cards expiring and ask whether they want to renew, rather than doing so automatically.
By Kim Mi-ju [email@example.com]
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