Card firms go to war over child subsidiesCredit card companies are going to illegal lengths to attract parents because a government child-care subsidy program requires parents to sign up for a card in order to receive payments.
Starting in March, the government will provide child-care subsidies for parents with kids under 5 through such cards. The stipend is currently provided to the needy, but all households will be able to receive it starting next month as part of the incoming Park Geun-hye administration’s drive to boost the country’s welfare system. The cards come in two types: debit and credit.
A homemaker surnamed Kim who raises a 4-year-old son in Sindang-dong, central Seoul, is a case in point.
Kim saw an ad on an Internet child-care community site saying that anyone who signs up for a particular card will get a free department store gift certificate, despite the fact that providing freebies like cash or gift certificates to get someone to sign up for such cards is illegal. She left a message saying she was interested and instantly got a message from a salesperson.
“The credit card salesperson came to my house to help me create the card and I got 50,000 won [$46.30] in cash as a bonus,” Kim said.
The Financial Supervisory Service said dozens of posts are made every day at such Internet forums, where homemakers say they received cash or gift certificates for signing up, or inquiring about how to get in touch with a salesperson.
The financial watchdog said the heated competition has even led salespeople to bundle such cards with other types of plastic, which is also illegal.
Market observers said the competition heated up when Woori, KB Kookmin and Hana SK cards entered the fray last year in a market that was previously dominated by Shinhan Card. The fact that all households with young kids will be eligible for the subsidies has made the market more lucrative.
Previously, only households in the bottom 70 percent income bracket with children between 3 and 4 benefited from the government subsidies.
Market observers estimate two million people will receive child-care money through these cards this year.
“Because the cards are created for a public function, we don’t get much profit for issuing them,” said an employee at a card company. “But we’re doing whatever we can because this is a great opportunity to boost our customer base in the already saturated credit card market.”
Experts advised parents to choose their card after thoroughly comparing the benefits offered by each company.
Hana SK Card’s card provides a 10,000 won discount off day-care center fees every month. KB Kookmin Card said its card provides up to 20 percent off family restaurants Outback Steakhouse, VIPS and T.G.I. Friday’s.
Woori Card said its card gives customers up to 7 percent of purchases at various outlets in points that can then be used as cash.
By Sohn Hae-yong [email@example.com]