Credit card issuers in South Korea increasingly are considering dropping eliminating various charges and fees, according to the Credit Finance Association of Korea.
Shinhan Card Co. Ltd., Samsung Card Co. Ltd., Hyundai Card Co. Ltd., Lotte Card Co. Ltd., BC Card Co. Ltd. and Hana SK Card Co. Ltd. stopped charging the handling charges for credit card cash loans as of Sept. 16, the association noted in a release issued Sept. 27. Such lending involves medium-term loans to cardholders, typically at a rate of 3.5% of the amount borrowed, according to the association.
The Credit Card Finance Association of Korea was established in 1998 as a nonprofit organization whose members include five credit card companies, 17 leasing companies, 16 installment-financing companies and four venture-capital companies.
Most banks that issue credit cards also have removed the charge, including Kookmin Bank Ltd., SC First Bank Ltd. and Korea Exchange Bank Ltd., the association says.
Card issuers also are considering a proposal to abolish handling charges for cash advances, which are short-term loans applied to cash withdrawn at ATMs that are added to the cardholder’s credit card bill, the association says, noting Shinhan Card abolished handling charges for cash advances in April, while Kookmin Bank and Lotte Card plan to do so this week. Charges on cash advances typically range from 0.5% to 0.2% of the advance amount.
Some banks, including Daegu Bank Ltd. and Busan Bank Co. Ltd., plan to continue charging the fees, the association says.
Cash advances in 2009 totaled 81.4 trillion won (U$70.5 billion or 52.4 billion euros), while cash loans amounted to 17.9 trillion won, according to data from the Financial Supervisory Commission, the country’s financial regulator.
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