[Gi Ha-Young's Life Card] Card Cancellation Within 1 Year of Issuance... Annual Fee Can Be Refunded

Annual fee prorated and refunded based on remaining period upon card cancellation
Annual fee not charged for cards unused for over 1 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

One of the considerations when issuing a new credit card is the annual fee, right? Since the annual fee is charged yearly on a one-year basis from the card issuance date, the card benefits must at least exceed the annual fee to justify issuing the card.

So how is the credit card annual fee structured? According to the Korea Federation of Banks, the credit card annual fee consists of a basic annual fee and an affiliate annual fee. The basic annual fee is charged by the card company to cover member management costs such as card issuance and sending usage statements, while the affiliate annual fee is charged to cover the costs of additional services provided by each card. The basic annual fee is charged per member or per card, and the affiliate annual fee is charged per card. Generally, once charged, the annual fee is recharged 12 months after the first billing month.

What happens to the annual fee if the card is canceled within one year after issuance or if the card has not been used for more than one year? If the card is canceled within one year after issuance, according to the Specialized Credit Finance Business Act and its enforcement decree, the paid annual fee can be refunded by calculating the remaining period on a daily basis. However, costs incurred for card issuance (only for new issuance) and costs for providing additional services to the member may not be refundable.

If the card has not been used for more than one year, the credit card annual fee is not charged. This applies to dormant cards. If an annual fee is charged despite no usage for over a year, you can request a refund from the card company. However, the initial annual fee paid at the time of first card issuance is not waived regardless of usage.

Also, if you receive a replacement card of a different type, the annual fee for the new card will be charged. The remaining balance of the previous card’s annual fee will be prorated and refunded, and the new card’s annual fee will be charged separately. If the previous card had an annual fee waiver condition, that condition does not transfer to the new card, and the new card’s annual fee is charged normally.

In the case of family cards, if it is the same affiliate card as the primary cardholder’s, the annual fee is not charged redundantly; however, if a separate family annual fee is set, it is charged individually.

Card annual fees vary by card company depending on card type and application timing. This is why it is necessary to check the details for each company. Above all, since the initial annual fee payment is regulated to prevent unnecessary credit card issuance and to cover costs related to card issuance, it is important to consider whether the credit card is worth paying the annual fee. Were you encouraged to apply for a card on the condition of an annual fee waiver? According to the Specialized Credit Finance Business Act, it is illegal to provide economic benefits exceeding 10% of the annual fee when recruiting credit card members, so keep in mind that such recruitment is illegal.