One in Three Credit Cards Go Unused
By Yoon Ja-young
Staff Reporter
Credit card companies have been aggressive in issuing their products to increase revenue but such efforts have turned out to be fruitless as one out of three cards on average are not being used, according to the Financial Supervisory Service (FSS), Thursday.
The financial regulator said that the number of credit card issued totaled 107 million as of the end of the last year, up 11.2 percent from the previous year.
It means each of the economically active population here holds 4.4 credit cards on average.
However, around 30.6 million credit cards, or one out of three, have gone unused for at least one year.
The number of inactive cards grew by 19.1 percent from the previous year, surpassing the issuance growth.
The FSS explained that the unused cards are increasing due to marketing competition between rival companies. It added that it would induce firms to settle the idle accounts.
In the past, holders of these credit cards had annual membership fees levied on them even if they didn't use the plastic. The regulator later banned this.
Lee Kyung-sang, a researcher at Korea Chamber of Commerce & Industry, said that such excessive competition could make the credit card industry a red ocean market. The number of subscribers who haven't used their card at all after subscription totaled 16.8 million as of last year.
"When considering that it costs around 5,000 to 10,000 won to issue a credit card, companies are wasting over 20 billion won on unnecessary issuance," he said.
Despite the soaring number of inactive cards, firms saw net profit increase by 12.6 percent last year, totaling 1.9 trillion won. They cut operating costs by 1.2 percent, and the corporate tax burden also dropped by 173.5 billion won.
Credit card spending totaled 472 trillion won in 2009, up 1.7 percent from the previous year.