[Inside Chodong] Spending Just to Keep Credit Cards... A Society That Encourages Putting the Cart Before the Horse

[Asia Economy Reporter Park Sunmi] This month, no discounts on online shopping, large supermarkets, delivery apps, and fuel.

Various discount benefits require a monthly card spending of over 400,000 KRW, but if consumption does not reach the set limit, the benefits cannot be received.

Most card companies require a certain amount of card usage performance in exchange for providing members with various benefits. If you spend a lot, the annual fee of premium cards, which can cost tens of thousands of won per year, may be waived. There are many benefits available when using credit cards, but in other words, to receive future benefits, prior consumption is essential.

For consumers who have only one or two credit cards, the member-exclusive benefits provided by card companies are actually more advantageous. Most cards offer discount and point accumulation benefits at a previous month’s spending level of around 300,000 to 500,000 KRW. However, if you have multiple cards, the situation changes. The more credit cards you carry in your wallet, the more spending is required to maintain the benefits.

Especially recently, with the competition in the credit card industry to issue Private Label Credit Cards (PLCC), specialized benefits have poured out, increasing consumers’ dilemmas in choosing credit cards as well as their concerns about spending.

PLCCs are characterized by card companies signing exclusive contracts with a single partner company, prominently displaying the partner’s name and focusing on providing specialized benefits. As more consumers regularly pay monthly subscription fees in the subscription economy era, PLCCs offering related discounts have surged, and more consumers are issuing cards to obtain these benefits. According to the office of Congressman Yoo Ui-dong of the People Power Party, as of the end of August, there are 75 types and over 4.64 million PLCC cards issued by card companies.

The flood of premium cards emphasizing abundant benefits in exchange for high annual fees is also encouraging consumer spending.

For example, the "Marriott Bonvoy The Best Shinhan Card," which surpassed 10,000 issuances within seven months of its launch, includes a free one-night stay at participating Marriott Bonvoy hotels with an annual fee of 267,000 KRW. As of mid-November, an event offers an additional one-night stay voucher if you spend over 3 million KRW by the end of February next year. To obtain the Platinum Elite status, which allows free room upgrades, you must spend over 60 million KRW within one year of the annual fee payment period.

As the calculation of required spending limits becomes more complicated depending on the number of cards held, card users are busy meeting spending thresholds at the end of each month. Naturally, if they fail to meet the spending requirements and cannot receive benefits, many cards are either canceled or just kept in wallets.

According to the Korea Federation of Credit Finance Companies, as of the third quarter of this year, the number of dormant credit cards reached 11.984 million, an 8.1% increase compared to the same period last year. The ease of card issuance in the era of non-face-to-face financial services is cited as a major cause of indiscriminate card issuance and the resulting stress of meeting spending thresholds.

Credit cards are merely a payment method that adds convenience to consumption. A wise consumer is one who can enjoy the benefits provided by card companies within planned spending. It is time to consider whether you are making unnecessary purchases just by chasing benefits amid the endless competition among card companies.

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