"Income Increased but Credit Card Limit Decreased"…Financial Supervisory Service Complaint Cases Released

FSS Identifies Consumer Precautions by Financial Sector

Mr. B used his credit card up to the limit without any delinquency. Although his recent income increased, he was notified of a reduction in his credit card limit. Consequently, Mr. B filed a complaint with the Financial Supervisory Service.

Card companies regularly review the appropriateness of the credit limits granted to members at least once a year and adjust the limits within one month if there are any changes. According to the model guidelines, disposable income, creditworthiness, and usage performance are comprehensively reviewed. Even if income has increased, if disposable income decreases due to increased loans, the credit limit may actually be reduced. Additionally, loans or credit card payment delinquencies at other financial institutions can lead to credit limit reductions and suspension of card use, so careful delinquency management is necessary.

The Financial Supervisory Service provided guidance on credit card-related precautions on the 31st. The FSS analyzes complaint cases recently received and processed by financial sector and shares important points that financial consumers should be aware of.

Mr. A, a small business owner, refused to pay the remaining installment payments on an advertising contract paid by credit card installments because the advertising company went out of business and did not properly provide the service. However, the credit card company informed Mr. A that the conditions for exercising the right of defense against installment payments were not met.

Even small business owners face restrictions on exercising the right of defense under the Installment Transactions Act for transactions involving the supply of goods or services for business purposes, unlike general consumers. This is because it is excluded as it arises from corporate profit-seeking activities rather than pure consumption.

Mr. C purchased a product worth more than 300,000 KRW last month using interest-free installments on his credit card. Mr. C believed he met the special point accumulation criterion of a 300,000 KRW limit in the previous month. However, in the case of that credit card, the amount used for interest-free installments is excluded from usage performance.

Credit card points or discount services are generally provided when consumers spend a certain amount or more in the previous month. However, since usage performance criteria vary by card product and promotion, it is important to carefully check the accumulation conditions. Additionally, taxes and other charges are often excluded from the previous month’s usage performance, so caution is advised.