[Gi Ha-yeong's Daily Card] "From Issuance Criteria to Services"... Card System Changes in the New Year

Issuance Criteria: NICE Credit Information Score 680 or Higher, KCB Score 576 or Higher
Cash Service: Separate Application Required for Use
Card Points: Can Be Cashed Out and Transferred in One Place

[Asia Economy Reporter Ki Ha-young]Is there anyone these days without at least one or two credit cards? 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 diverse stories related to cards, which are inseparable from our consumer life, through the weekly 'Cards in Daily Life' corner, including introductions of new cards, behind-the-scenes industry stories, and guides for card beginners.

Photo by Yonhap News

Starting next year, several aspects related to credit card usage will change. From the credit evaluation system, which is the standard for card services, to cash services and card points, both major and minor changes are anticipated. Knowing these in advance and utilizing them well will help with card usage, so we have summarized the credit card-related changes coming next year.

Personal Credit Evaluation Standard Changes from 'Grades' to 'Scores'

First, from January next year, the personal credit evaluation standard will change from grades to scores. Instead of being divided into 1 to 10 grades, it will be detailed into scores from 1 to 1000. Regarding credit card issuance criteria, the current standard of grade 6 or higher will change to a NICE Information Service credit score of 680 or higher, or a Korea Credit Bureau (KCB) score of 576 or higher. With the transition to a score system, consumers who had little difference in credit scores, such as those in the upper ranks of grade 7 and lower ranks of grade 6, are expected to have improved financial accessibility.

Separate Application Required to Use Cash Services

According to the revision of the 'Standard Terms and Conditions for Individual Credit Card Members,' from next year, cash services will only be available if separately applied for when issuing a new credit card. If you want to use cash services after card issuance, you must undergo a separate credit review. Also, if you repay a card loan early within 14 days after taking it out, consumers can be informed that they can exercise the 'right to withdraw from the loan contract.' Using this withdrawal right deletes the loan record itself, so it is advisable to actively use this right for credit management.

Consolidate Scattered Card Points into Cash and Transfer to Account at Once

System improvements to reduce unused card points disappearing are also being implemented. The Korea Financial Telecommunications & Clearings Institute will start a service called the ‘Card Points Bulk Account Transfer System,’ which allows users to convert points from multiple cards into cash at once and transfer them to a desired account. Card points can also be inherited. Until now, there was no system to notify heirs of remaining card points when a card member passed away, but from next year, if a card company learns of a member’s death through heir financial transaction inquiry requests, it will provide information on the points held and inheritance methods.

In addition to receiving notifications via mobile text messages (SMS), card company notifications will also be available through KakaoTalk. The notification cycle for members not using revolving credit will be shortened from the current 18 months to 12 months, and the notification methods will be expanded to include at least two of the following: written, phone, email, and SMS. When issuing family cards, it will also be prohibited to collect overdue debts of the primary cardholder from family members.

Card Information Leakage during Overseas Direct Purchase? Blocked with 'Virtual Cards'

Services to prepare for the increasing overseas direct purchases and the possibility of card information leakage are also expanding. From next year, the ‘virtual card for overseas direct purchase’ service, currently implemented by some card companies such as KB Kookmin, Lotte, Woori, and BC Card, will be expanded to the entire card industry. Virtual cards issue overseas transaction card numbers and CVC codes with validity periods set between one week and one year. This allows consumers to receive temporary card numbers to prevent card information leakage. Consumers holding cards issued by domestic card companies in partnership with international brands such as Visa, MasterCard, Amex, UnionPay, and JCB can apply for virtual cards through each card company’s app or website.

Next year, income deduction benefits for credit card usage are expected to increase to stimulate domestic consumption. Although not yet finalized, it is likely that an additional 10% deduction will be applied to the current deduction rate of 15-40% for credit card usage exceeding this year’s amount by more than 5%. Considering this additional deduction, the current credit card income deduction limit of 2 to 3 million KRW (depending on total salary level) is expected to increase to 3 to 4 million KRW. Considering these government policies and the changes in card services from next year, how about planning your expenditures for next year? For planned consumption, reviewing your card spending habits over this year will be the first step.