November 24, 2024

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A customer uses a credit card for payment (Yonhap)

The number of unused credit cards in Korea exceeded 15.55 million as of the fourth quarter of last year, according to data from the Credit Finance Association released on Monday.

The association regards a credit card not in use for more than a year as a dormant card.

Dormant credit cards made up 17.98 percent of the total number of issued credit cards.

Compared to the third quarter of 2022, the number of unused credit cards increased by 913,000 from 14.64 million. Dormant credit cards made up 17.65 percent of the total number of issued credit cards at the time.

In the first and second quarters of 2022, the number of unused credit cards was 13.74 million (17.56 percent) and 14.28 million (17.41 percent), respectively.

BC Card held the highest percentage of unused credit cards among financial firms at 38.5 percent.

Several local banks, such as Jeju Bank (32.32 percent), Jeonbuk Bank (25.96 percent), Citibank (25.64 percent), Suhyup Bank (24.3 percent) and IBK Industrial Bank (20.66 percent), also had a high percentage of unused credit cards, exceeding 20 percent.

Hana Card had a relatively high percentage of unused credit cards among the major card companies, with a rate of 15.23 percent, followed by Woori Card (13.75 percent), KB Kookmin Card (10.6 percent), Hyundai Card (9.63 percent), Samsung Card (9.38 percent) and Shinhan Card (9.11 percent).

Korean financial regulators keep track of people’s unused credit cards and recommend canceling them, as there is a risk of them being exploited for various criminal activities.

Back in 2011, the number of dormant credit cards exceeded 31 million, but the number decreased rapidly due to the financial authorities' reduction policy in 2012.

The policy automatically canceled credit cards that have not been used for over a year, and this also helped to curb excessive competition among credit card companies that had been focusing on expanding the number of clients. As a result, the number of unused credit cards dropped to 8 million at the end of 2015.

However, the financial authorities decided to discontinue the automatic cancellation policy in May 2020, as it caused inconvenience and financial losses to credit card users -- leading to an increase in the number of dormant cards.

In addition, industry sources say that the reason for the increase is also due to customers applying for multiple credit cards during the loan application process to secure lower interest rates, but only using one or two that offer necessary benefits in their daily lives.

By Song Seung-hyun (ssh@heraldcorp.com)