[Ki Ha-young's Life Card] 'Minus Cards' Like Overdrafts... Plan Your Repayment First

Woori Card Launches 'Uka Minus Loan'
Lotte Card Also Scheduled for Release in Second Half of Year

[Asia Economy Reporter Ki Ha-young]Is there anyone these days without at least one credit card? In modern society, anyone can have a card if they want. Credit cards have brought unparalleled convenience to daily life. Now, wherever you go, you can easily see people paying with credit cards or smartphones. As demand has increased, cards with various benefits are being released almost daily. Accordingly, Asia Economy delivers various stories related to cards, which are inseparable from our consumer life, through the weekly 'Cards in Daily Life' corner, from introducing new cards to industry behind-the-scenes and guides for card beginners.

Photo by Yonhap News

A 'Minus Card' that can be freely used within a loan limit at a fixed interest rate, similar to a bank overdraft account, has appeared. This is a loan service that card companies introduced once in the early 2000s but then disappeared. However, as loan demand increased due to the novel coronavirus disease (COVID-19), card companies are releasing related products emphasizing convenience.

Available anytime within contract period and limit at fixed interest rate

The Minus Card is characterized by the ability to freely use it within the contract period and limit at a fixed interest rate. Unlike individual loans, interest is charged only on the amount and period actually used by the customer. Even if used and repaid frequently, the number of loan cases is counted as one, reducing the burden on personal credit.

Woori Card introduced the 'Wooka Minus Loan' on the 14th. It is available to credit card holders with excellent credit, allowing free use within the contracted limit. The usage limit is up to 100 million KRW, and the interest rate is set between 4.0% and 10.0% annually, depending on the customer's credit rating.

Considering that the average interest rate of existing long-term card loans (card loans) is 13-14% annually, Woori Card claims this is the industry's lowest interest rate. The contract period is one year and can be extended annually depending on credit rating.

Lotte Card also announced the launch of a Minus Card as part of its new product lineup called 'LOCA' series earlier this month. It is scheduled to be released in the second half of this year, but specific limits and interest rates have not yet been disclosed.

Shinhan Card has been continuously operating the product since introducing the 'Minus Loan' for customers with excellent credit in 2008. The usage limit ranges from 3 million to 50 million KRW, and the interest rate is about 8.7% to 21.9% annually. The basic contract period is 12 months, and it can be automatically extended up to three years in one-year increments depending on credit rating.

Minus Card... A timely financial relief vs. growing debt

The Minus Card can be used freely within the contracted period and limit, making it useful when emergency funds or living expenses are urgently needed. Since interest is paid only on the amount and period used, interest management is more reasonable compared to existing card loans. For this reason, card companies explain the launch of Minus Cards emphasizing customer convenience.

However, since card loans are mainly used by middle- to low-credit borrowers, if you are considering a Minus Card, it is often the case that loans from primary financial institutions such as banks are no longer possible. If you use a Minus Card without a clear repayment plan, attracted by its convenience, your debt including interest may increase, so caution is necessary. Also, even though the number of loan cases is counted as one, since it is a loan product, if you default, it will inevitably affect your credit rating, such as lowering it. Ultimately, whether the Minus Card becomes a timely relief or growing debt when you need urgent funds depends on you who use it, so keep this in mind.

This content was produced with the assistance of AI translation services.