'Even the Last Bastion Falters'... Corporate Credit Card Applications Turn to Decline Amid Worst Economic Conditions

Companies Seek Cost-Cutting Amid Worsening Business Sentiment
Concerns Rise Over Vicious Cycle of Weakened Corporate Card Usage and Sluggish Domestic Demand

It has been revealed that domestic companies have reduced their applications for new corporate credit cards this year. This marks the first decline in approximately seven years since 2018. The move is interpreted as companies taking 'cost-cutting' measures in response to worsening economic conditions.

It has been revealed that companies have reduced new corporate credit card applications. The decrease as of January is the first in 21 years since the credit card crisis in January 2004 (-120 cards). There are concerns about a vicious cycle of domestic demand stagnation due to the contraction in corporate card usage.

According to the Bank of Korea's Economic Statistics System on April 21, the number of corporate credit cards issued in January was 11,627, a decrease of 22 cards compared to December of the previous year (11,649 cards). This is the first decline in about seven years since May 2018 (-12 cards).

In terms of January figures, this is the first decrease in 21 years since the credit card crisis in January 2004 (-120 cards). Although the decrease in January itself was not significant, it is considered unusual given that the issuance of corporate credit cards has generally increased every month except during special circumstances such as financial crises. This stands in contrast to the issuance of personal credit cards, which rose by 249 cards to 122,013 in January compared to the previous month, continuing an upward trend since April 2016.

Corporate credit cards are typically issued in the name of a corporation that has a business registration number. These cards are linked to corporate bank accounts, allowing payments to be processed as company expenses. The slowdown in the growth of card issuance is interpreted as a result of companies at the field level taking cost-cutting measures in consideration of the economic downturn. Beyond natural fluctuations due to card expiration, it appears that companies facing relatively difficult circumstances have not actively renewed existing cards or applied for new ones.

This year, it has been revealed that companies have reduced new corporate card issuance applications as part of 'cost-cutting' measures. The photo is a reference image to aid understanding of the article and is unrelated to the content. Pixabay

In fact, the Bank of Korea's Composite Business Survey Index (CBSI) for all industries in January dropped by 1.4 points from the previous month to 85.9, marking the lowest level since September 2020 (83.4). At that time, overall economic sentiment had plummeted due to heightened political uncertainty following the declaration of martial law, and concerns were mounting over the new U.S. administration's tariff policies. Reflecting this on-the-ground sentiment, a survey conducted by the Korea Employers Federation in January of 508 domestic companies with 50 or more employees found that 96.9% of respondents answered that an economic crisis would occur this year.

The amount spent using corporate credit cards has also shown a slowdown in growth. In January, the total usage amount was 17.0541 trillion won, a significant decrease from 19.0647 trillion won in the previous month. Since reaching an all-time high of 19.8544 trillion won in May 2022, the figure has not surpassed this previous peak for nearly three years. Some have raised concerns that, in the medium to long term, stagnation or decline in corporate credit card usage could become a vicious cycle that delays the recovery of domestic demand.