South Korea in tight watch of increasing dormant credit cards

Dormant credit cards, now about one fourth of the total issued, is on the rise in South Korea due to excessive issuances.

This is brought about by tight competition among credit card firms who earn a combined 150 billion from the minimum annual fee for unused credit cards of 10,000 won or US$9.30, each, reports Yonhap News.

The number of credit cards unused for payments for 12 months reached 32.9 million as of end-June, up 1.66 million from six and the Credit Finance Association.

The number of dormant credit cards has been on the rise since 2008, when it hit 25.7 million, with the figure expected to surpass 35 million by the end of this year.

Industry watchers said excessive competition among credit card companies has led to the increase of idle plastic money, only leaving the firms with more profits from annual membership fees.

The Financial Services Commission made it compulsory for credit card firms to require card users to pay the annual fee, following the country's credit card bubble in 2003. It has now launched a task force to cap the rise in unused credit cards and prevent side effects stemming from the increase. Furthermore, the FSS has been conducting weekly reviews of credit card companies on a number of categories such as loan increases and marketing costs, in a bid to limit the on-year growth of card firms' lending and individual users' limits to 5 percent.