KOREA has been one of the most generous countries for credit card users. The freedom has been a double-edged sword. It boosted consumption and reduced the black market. It has now become a burden for the economy and the people. Regulators’ belated steps of curbing the unscrupulous issuance of credit cards are welcome but additional radical steps are necessary to prevent delinquents. From now on, only adults aged 20 and above will be able to obtain plastic cards. New customers must have income exceeding their debts with a proper credit record. Users of debit cards and prepaid cards will enjoy income tax deductions of up to three million won, or about 30 per cent of the amount they spent. Users of debit cards will receive added points for their personal credit rating. This is to help consumers live within their means as the money is taken out of one’s bank account immediately when making a purchase. A new rule will automatically invalidate credit cards that remain unused for 17 months. In a country with a population of 50 million, 120 million credit cards are in circulation. It means each economically active person has an average of five credit cards, the result of excessive competition among the 20 issuers.

…Many young people without income, especially college students, have been living on credit. … The latest steps are necessary for preventing the situation from deteriorating as the economy is predicted to worsen next year. Issuers face total ceilings in the amount of loans, the number of cards issued and their credit lines. They will face automatic supervision when they use more than 25 per cent of their income for marketing. These regulatory steps are to check their overleveraged business expansion. …Consumers must cultivate a habit of living within their means. — (Dec 27)