Published : 2013-09-11 15:31
Updated : 2013-09-11 15:31
About one in every five credit cards issued in South Korea are not in use, data showed Wednesday, amid card firms' unwillingness to clear them off citing market share.
The number of dormant credit cards stood at 23.5 million at the end of June, accounting for 20.4 percent of the total issuance, according to the Financial Supervisory Service (FSS).
The proportion has stayed around the 20 percent range since the first quarter of last year, but it is a sharp decline compared with 28.6 percent tallied at the end of 2009, FSS data showed.
A dormant credit card refers to one that has not been in use for at least one year.
The fall in the number of inactive cards came as the financial regulator has been mandating card companies to reduce the figure by closing them.
Since April this year, the policy-making Financial Services Commission (FSC) has amended related laws that stipulates that a dormant credit card is to be automatically terminated if it has shown no record of payment for the past 12 consecutive months.
Despite the regulatory move to curb the rise of inactive cards, its proportion leveling off for the past few quarters reveals that card firms are not so enthusiastic about getting rid of them, the FSS said.
Card companies cite securing market share as a reason for their reluctance. Since dormant cards have been counted as valid, they were included in gauging which card firm has a bigger share in the competitive market.
But the FSS is stern about terminating the inactive cards, as they distort the market as well as the credit risks of card companies.
In the last four months after the FSC imposed the new automatic termination rule, about 9.74 million, or 54 percent of the total, dormant cards are estimated to have been canceled as of end-March, the regulator said. (Yonhap News)