Why are dormant credit cards surging in Korea?

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In a country where most adults carry multiple credit cards, dormant accounts have become a growing concern for the industry. On average, around 5,000 credit cards become inactive each day, cutting into issuers’ profits and increasing the risk of financial fraud.

Jeong In-a, a 24-year-old university student, holds one such card. In 2023, she signed up for a new Hyundai Card specifically to use Apple Pay, following an exclusive partnership between the two companies. These days, however, she rarely uses the service and the card has been left idle.

"Canceling it is a hassle. I’m not sure when I might need it, so I just leave it," Jeong said.

According to the Credit Finance Association, as of March, a total of 16.334 million credit cards were dormant across eight major domestic card companies — Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Hana, Woori and BC. This marks a 13.24 percent increase from a year ago.

A key driver behind this trend is the growing issuance of private label credit cards (PLCCs). These co-branded cards offer benefits tailored to specific brands, with marketing costs shared between the card issuer and the partnering company.

Many consumers already have a primary credit card but apply for multiple PLCCs to access exclusive perks. Over time, as the appeal wears off, these secondary cards often fall into disuse.

Another contributing factor is weakened consumer sentiment amid high inflation. After remaining in the 1 percent range from September to December, the inflation rate rose to 2.2 percent in January and stayed in the 2 percent range for four consecutive months.

Card issuers say dormant cards impose financial burdens, as they generate issuance and management costs regardless of usage.

According to the Financial Statistics Information System, the eight major card companies spent a combined 309.77 billion won ($219 million) on card issuance in 2024. If just 10 percent of these cards are dormant, that translates to more than 30 billion won in sunk costs.

"For card issuers, profitability improves only when customers use their cards consistently," said a card company official. "As the number of dormant cards rises, the sunk costs we must absorb grow larger, inevitably affecting overall profitability."

Unused cards can also pose risks to consumers. If lost or stolen, they may go unnoticed, leaving them vulnerable to financial crimes such as card cloning or unauthorized transactions.

In response to growing concerns, financial authorities have launched a service that allows users to view and cancel all their dormant cards instantly. However, since cancellations are left to the user’s discretion, the overall effectiveness of the initiative has been limited.

Card issuers are also ramping up efforts to reactivate dormant cards through targeted marketing, viewing it as a more cost-effective strategy than acquiring new customers.