Credit card dormancy hits record rate, reflecting heated market

A customer inserts a credit card into a payment terminal at a store in this undated file photo. Yonhap

More credit cards than ever are remaining dormant, reaching a record share of all cards issued as firms engage in fierce competition to attract customers, data showed Monday.

The statistics, released by the Credit Finance Association, showed that dormant credit cards — defined as those unused for over a year and temporarily suspended — rose to 14.9 percent of all issued cards in 2025.

According to the association, the surge in dormant cards reflects excessive competition among credit issuers, each vying to lure customers from rivals in a time of weakening profitability.

The association highlighted the steady upward trend of card dormancy, which has risen from less than 10 percent in 2021 to 13.9 percent in 2024.

The number of dormant cards has increased roughly four times faster than the total number of cards issued in recent years. Dormant cards rose 24 percent compared with 6.4 percent for all cards in 2022, 13 percent versus 3.7 percent in 2024 and 9 percent versus 2 percent in 2025.

“In a limited market, credit card companies repeatedly engage in short-term, zero-sum competition to poach customers from one another, which also leads to the proliferation of dormant cards,” an industry official said.

Another official explained that the shift of new customer acquisition channels from offline to online platforms has also accelerated the accumulation of dormant cards.

“Compared with offline methods, these online campaigns tend to prioritize aggressive marketing over tailored customer engagement, resulting in a higher number of dormant cards,” the official added.

The growing popularity of private label credit cards (PLCCs) is also cited as a factor behind the rise in dormant cards.

PLCCs give rewards or benefits only for specific brands. Because they can’t be used as broadly as regular credit cards, customers stop using them once they have spent enough to earn rewards for that particular brand.

Industry officials warned that the growing number of dormant cards is driving up costs for credit card companies.

They explained that card production, delivery and marketing expenses are incurred when a card is issued, but if the card goes unused, there’s no way to recover those costs. Spending additional money on campaigns to encourage cardholders to use dormant cards further reduces cost efficiency.

The officials described the competition as “cutting off your own flesh,” since the sector ends up hurting itself, often leading to a reduction in benefits offered to consumers.