Story by: Paul Sharkie, Photos by: Rob Green
One of the more common conversations I have with customers involves a line of questioning that starts like this: “I think I need a credit card …. How can I get one as quickly as possible?” My initial response to this kind of request is not what you might think. More specifically, I would advise any prospective applicant to consider why they want a card and remind them that, beyond the basic concept of paying your bill on time each month, credit cards are managed a bit differently in Korea.
Put simply, the cards offered here generally do not operate on a minimum payment system as they do in other places around the world. Here, the majority of the balance, if not all, must be paid each month. If you fail to do so, or make a late payment, this oversight can negatively affect your credit limit and credit rating much more immediately than you might expect if you were living elsewhere.
In countries where you are only required to submit a minimum monthly payment, the convenience of having credit is understood to be paired with high interest rates on the remaining balance. While this is fine for some, for others the credit system often results in bills that become unmanageable due to their rising minimum payments. By contrast, Korean credit card policies tend to encourage people to live slightly more within their means. In other words, you should not see your Korean credit card as another source of income. This often means tighter eligibility criteria to get a card in the first place, as well as lower credit limits for new customers or late payers.
Though newcomers to the Korean credit system might find the process daunting, it’s actually a lot simpler than you might think. In Korea, your credit card is linked to your bank account, and the balance due is automatically deducted each month. Provided that you have the funds in your account, these payments shouldn’t present any problems. What is very important, however, is to be aware of your automatic payment date and make sure you have a sufficient balance in your account. In addition to an online or paper bill, you can also call your respective institution’s card call center to find out what the balance of your next bill is. You can even request such information be sent to you via text message. With regards to the latter option, even if this service isn’t available in English, the messages usually make it quite obvious how much you’ll have to pay and on which date.
If you have spent a little too much in the previous month, you do have the option to call your card company and ask them to split the payments into one or more transactions over an agreed number of months; in this case, the staff should advise you if any interest will be applied — something that depends on how many months you wish to spread the cost over. Shops might also ask you to split the payment. If they do not, wait a couple of days and then contact your bank. This should be done in advance of your actual billing day.
• Personally, I rarely use my debit/check card and use my credit card for almost everything I buy. I do this because a) my card provides numerous benefits, which increase the more I use it (air miles, discounts etc.) and b) my income far exceeds my credit limit on the card, which means I will always have enough money in my account to both pay the card balance and take care of my other monthly outgoings. Any leftovers get stashed into an Installment Savings Account or a Time Deposit (check your bank’s equivalents).
• If you have a good track record for paying your bills on time, why not call to request a credit limit increase? The worst thing that could happen is that they may say no. Please do consider your monthly income, though.
• Credit cards here offer lots of benefits and discounts. Shop around.
• Unlike check cards, which can carry the T-Money function that allows you to prepay for your transportation, having a credit card allows you to pay for your transport at the end of the month. Again, make sure you have enough funds in your bank account to cover this.
• Consider a “secured” credit card if you are not eligible for a regular card. Although this kind of card looks and operates like other cards, a security deposit is required, which you will get back with a small amount of interest when you close the account. Using such a card in conjunction with making timely payments will also help you build your credit profile.
• Applications require a visit to a branch with your passport and Alien Registration Card, and eligibility is evaluated based on each applicant’s individual circumstances. You will also need to provide proof of your income (usually three recent pay-slips, though your contract of employment will sometimes suffice).
• Prospective or existing Shinhan Card customers may call 1544-7333 on weekdays from 9 a.m. to 6 p.m., or visit eng.shinhancard.com/contents/main.jsp for more information.