"I Don't Want to Waste Money"…The 'I Card' Gaining Popularity Again These Days [Pocket Talk]

Rising Popularity of Overlooked 'Debit Cards'
Movement to Curb Overspending Gains Momentum
Aligned with the 'YONO' Trend

Editor's NoteIt is an era where one serving of Samgyeopsal costs 20,000 won and a bowl of Jajangmyeon is 7,500 won. The Consumer Price Index for 2024 stands at 114.18 (2020=100), and in 2025, the burden on consumers' shopping baskets has increased due to continued high inflation. Through the Week+Money+Talk (Jumunetok) series, we aim to share stories about consumption closely connected to our wallets alongside the ever-changing prices.

As high inflation continues, interest in debit cards is increasing. Pixabay

With the widespread use of credit cards that do not charge fees until the payment due date, debit cards, which had been overlooked for a while, are gaining attention again. This is because, amid the ongoing economic downturn, consumers have become more inclined to manage their spending more strictly. This trend aligns with the 'YONO (You Only Need One)' movement, which encourages reducing unnecessary consumption and purchasing only what is essential.

Interest in Debit Cards Rises Amid Continued High Inflation

As of the end of the fourth quarter last year, according to the Credit Finance Association on the 23rd, the total number of debit cards issued by eight card companies including Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Hana, Woori, and BC Cards reached 62,881,000, marking a 2.6% increase compared to the same period the previous year. The growth rates were ▲1st quarter 0.4%, ▲2nd quarter 1.5%, ▲3rd quarter 2.2%, and ▲4th quarter 2.6%, showing a steep upward curve.

While the popularity of debit cards is rising, the growth of credit cards is somewhat slowing down. According to the Bank of Korea's 'Domestic Payment Trends,' the average daily usage amount of postpaid (credit) cards in the first half of last year was 2.694 trillion won, which increased by only 4.1% compared to the same period the previous year. The growth rate of credit card usage was 13.1% in the first half and 14.0% in the second half of 2022, but it dropped to 8.8% in the first half and 5.0% in the second half of 2023. The Bank of Korea explained that the slowdown was due to delayed recovery in private consumption. During the same period, prepaid (debit and cash) cards showed growth, rising from 1.8% to 3.3%.

Until just a few years ago, debit cards did not attract much attention from consumers. This was because credit cards offered enhanced benefits and convenient payment services became widespread, making debit cards relatively less competitive. In the past, card companies actively encouraged credit card use by offering high cashback, point accumulation, and discount benefits. On the other hand, debit cards had relatively limited benefits and lacked installment payment functions, which made spending burdensome when purchasing expensive items.

Debit cards are gaining attention again because economic uncertainty has increased, leading more consumers to reduce overspending and avoid debt. According to a survey released by the credit card platform 'Card Gorilla,' 36.8% of respondents cited 'preventing overspending' as the reason for using debit cards. This was followed by 'year-end tax deduction' (17.5%), 'enabling planned spending' (15.8%), and 'low annual fee burden' (15.8%). The survey was conducted over about three weeks starting October 1 last year on visitors to the Card Gorilla website, with a total of 3,347 participants.

Debit Cards Popular Among Overseas Travelers as Well

Pixabay

Debit cards allow payments only within the account balance, effectively reducing unnecessary spending and enabling systematic management of consumption. Moreover, since the balance is deducted immediately upon payment, spending details can be checked in real time, allowing for planned consumption. Therefore, debit cards are gaining attention as a payment method that enables rational spending for the 'YONO tribe' who aim to minimize expenses.

In particular, the fact that income tax deduction benefits can be received is also a notable factor. While the income deduction rate for credit cards is 15%, debit cards apply a 30% rate, resulting in significant tax savings. Additionally, debit cards do not incur overdue interest like credit cards, and the absence of annual fees means less additional cost burden, which positively influences consumers.

Furthermore, the rising popularity of travel debit cards among overseas travelers in recent years has positively impacted the preference for debit cards. These cards, intended for overseas payments, offer preferential exchange rate benefits. Previously, credit cards were often used for overseas payments, but they had drawbacks such as foreign transaction fees and exposure to exchange rate fluctuations.

In contrast, travel debit cards allow users to pre-load foreign currency and make payments at a fixed exchange rate, reducing the burden of exchange rate fluctuations. Fees are also waived for overseas ATM withdrawals and payments.