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Korean Credit Cards
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rudyflyer



Joined: 26 Feb 2003
Location: pacing the cage

PostPosted: Sun May 30, 2004 4:07 am    Post subject: Korean Credit Cards Reply with quote

OK I am a bit confused on this so those of one you with a Korean SO please help me.

Last week I was able to get a Samsung Visa card, they came to our univ getting the foreign faculty to sign up. Got the card with a ridiculously high credit limit and it works fine.

Now here is where I am confused. Are these cards supposed to be paid off every month like a US American Express card or can we spread out payments? Somebody told us that. The stuff we got with the card says something about interest rates. I need some more dental work done (several more crowns, yes they are needed) the dentist said I can pay it off in installments like my US credit cards. I'd like to get this work done but don't want come the end of the month to have a million won debit hit my bank account. Also while I was renewing my gym membership with my US Visa, they asked me how many installments I want to pay it off in. I was confused

any help would be apperciated.
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kangnamdragon



Joined: 17 Jan 2003
Location: Kangnam, Seoul, Korea

PostPosted: Sun May 30, 2004 4:57 am    Post subject: Reply with quote

When making a major purchase i.e. gym membership or computer, your payments may be spread out if you use a Korean credit card. For example, I spread my new computer out over 12 months.

Just make sure the payments are not automatically deducted from your bank account. If this is the case, they may take the entire debt each month.


Last edited by kangnamdragon on Sun May 30, 2004 4:13 pm; edited 1 time in total
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Squid



Joined: 25 Jul 2003
Location: Sunny Anyang

PostPosted: Sun May 30, 2004 3:51 pm    Post subject: Reply with quote

Trap for young players.

Korean credit cards operate more like charge cards, like AMEX, and every month the total outstanding balance is automatically debited from your bank account...

UNLESS...

You make an agreement with the retailer or supplier of goods, in this case your dentist, to spread the debits over a number of months. This approach is common when purchasing big ticket items, but remember to get the agreement prior (you sign it and keep a copy).

Bit of a shock first time it happens.
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Harpeau



Joined: 01 Feb 2003
Location: In Hannam-dong, Seoul.

PostPosted: Sun May 30, 2004 3:55 pm    Post subject: Reply with quote

Our Korean BC VISA is deducted on a monthly basis. The whole balance is taken out of our account on the 1st. I would suggest that you talk to them and tell them what date is most convenient for you. It seems that most Korean cards won't let you roll the balance to the next month, but ask them and be clear about how it works. Best of luck to you.
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bulgogiboy



Joined: 12 Nov 2003

PostPosted: Sun May 30, 2004 4:02 pm    Post subject: Reply with quote

Hey Rudyflyer,

Just curious, what is your 'ridiculously high' credit limit?

I think credit cards are only for university teachers, right?

thanks,

BB
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kangnamdragon



Joined: 17 Jan 2003
Location: Kangnam, Seoul, Korea

PostPosted: Sun May 30, 2004 4:15 pm    Post subject: Reply with quote

I think it would be more appropriate to say that non-hagwon employees generally can get credit cards.
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dogbert



Joined: 29 Jan 2003
Location: Killbox 90210

PostPosted: Sun May 30, 2004 4:53 pm    Post subject: Reply with quote

There are two main types of credit cards. The one most of us who lived in the U.S. are familiar with is the revolving credit card, which requires a minimum monthly payment and allows you to carry an outstanding balance on which interest is charged.

The kind most commonly used in Korea, however, is the non-revolving credit card. This type of card (like an American Express card back home, as someone noted) requires full payment of the outstanding balance each month. In Korea, this is usually done automatically by deducting the amount from the bank account you choose to be linked to your credit card. If there are unsufficient funds in your bank account to satisfy the debt, the credit card company will try to deduct the owed amount from your account twice a day until it is paid. Not only that, if you continue to carry a balance for three months, your name will be inscribed in the greatly feared book of bad debtors. Plus, the outstanding balance is subject to interest rates as high as twenty-four percent (and even higher, in some cases).

The good news is that if you pay off your balance in full each month, no interest is charged.

Sometimes, though (as a few people have mentioned), you will have the option of choosing to pay off a purchase in equal monthly installments (typically, three, six, or twelve months). However, unless the retailer and/or card company is running some sort of special offer, you will be charged a high rate of interest for this privilege.

AFAIK, the only Korean issuer of revolving credit cards is Citibank.
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Harin



Joined: 03 May 2004
Location: Garden of Eden

PostPosted: Sun May 30, 2004 5:27 pm    Post subject: Reply with quote

dogbert wrote:
There are two main types of credit cards. The one most of us who lived in the U.S. are familiar with is the revolving credit card, which requires a minimum monthly payment and allows you to carry an outstanding balance on which interest is charged.

The kind most commonly used in Korea, however, is the non-revolving credit card. This type of card (like an American Express card back home, as someone noted) requires full payment of the outstanding balance each month. In Korea, this is usually done automatically by deducting the amount from the bank account you choose to be linked to your credit card. If there are unsufficient funds in your bank account to satisfy the debt, the credit card company will try to deduct the owed amount from your account twice a day until it is paid. Not only that, if you continue to carry a balance for three months, your name will be inscribed in the greatly feared book of bad debtors. Plus, the outstanding balance is subject to interest rates as high as twenty-four percent (and even higher, in some cases).

The good news is that if you pay off your balance in full each month, no interest is charged.

Sometimes, though (as a few people have mentioned), you will have the option of choosing to pay off a purchase in equal monthly installments (typically, three, six, or twelve months). However, unless the retailer and/or card company is running some sort of special offer, you will be charged a high rate of interest for this privilege.

AFAIK, the only Korean issuer of revolving credit cards is Citibank.


Good info - I am learning new stuff everyday on dave's. I guess I got my first credit card in the states and just assumed that everything'd be the same in Korea. Sad
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Wangja



Joined: 17 May 2004
Location: Seoul, Yongsan

PostPosted: Sun May 30, 2004 5:49 pm    Post subject: Reply with quote

Yep, that is a good summary: more like a "charge card" than a traditional credit card. Mine is with Shinhan and the entire balance is settled direct from my account every month. I did use the "3 payments" once and it worked fine. My credit limit (from memory) is 23 million KRW and 7,000 USD internationally. I have never tested whether that is 23 million PLUS 7,000 USD, or a combined limit.
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dogbert



Joined: 29 Jan 2003
Location: Killbox 90210

PostPosted: Sun May 30, 2004 6:00 pm    Post subject: Reply with quote

Thanks.

Couple more thoughts.

Good point on the multi-currency limits. The limits are combined, so that it's not KRW23 mio plus USD7000, but both together. If you do use a Korean credit card to purchase an item priced in a foreign currency, be aware that you may have to suck up whatever exchange rate the card company uses to convert the price, as it will be converted into Korean won.

If you use your credit card to take out a cash advance, you will be charged interest, even if you pay it back the next month. Actually, the card companies encourage their cardholders to take out term loans on their cards, because its a big moneymaker for them. Unfortunately, it's a trap for the unwary. The Korean public went from having an average of less than one credit card per person in the mid-90's to a much higher rate in about four years, with no corresponding credit education. It wound up with a nationwide equivalent of what happened back in the U.S. in the 1990s when credit card companies started signing up college students.
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Wangja



Joined: 17 May 2004
Location: Seoul, Yongsan

PostPosted: Sun May 30, 2004 6:09 pm    Post subject: Reply with quote

I've used mine for the past 6 years or so and have to say that the exhange rate has always been reasonable, even if passing from the currency of purchase through USD on the way to KRW.

Don't know about the cash advances as I have never used them. I have used the cash card that comes with the account: that too works internationally, no "exchange control" limit except the balance in the bank account and again, reasonable exchange rates when used overseas.

All in all, a pretty good system.
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peppermint



Joined: 13 May 2003
Location: traversing the minefields of caddishness.

PostPosted: Sun May 30, 2004 6:40 pm    Post subject: Reply with quote

should this be moved to the FAQ?
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rudyflyer



Joined: 26 Feb 2003
Location: pacing the cage

PostPosted: Sun May 30, 2004 7:42 pm    Post subject: Reply with quote

bulgogiboy wrote:
Hey Rudyflyer,

Just curious, what is your 'ridiculously high' credit limit?


by ridiculously I mean each of us (Mrs Flyer and myself) have limits over 6 million won each (about US$ 5,000) we think this is high as we each have our own US Visa Card with a total limit of $4000.

We try to pay cash for everything.

I really apperciate the help here folks on this.

BTW I have approached a mod about moving to this to the FAQ forum. This is good info for people though I'm not sure if hogwon teachers can get Korean CC's.
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PEIGUY



Joined: 28 Mar 2004
Location: Omokgyo

PostPosted: Sun May 30, 2004 8:20 pm    Post subject: Reply with quote

now, what about a Canadian Credit Card? i am planning on getting one before i leave just to have as an emergency sort of thing. If i got a credit card from the Royal Bank lets say would it be accepted in Korea??
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dogbert



Joined: 29 Jan 2003
Location: Killbox 90210

PostPosted: Sun May 30, 2004 8:44 pm    Post subject: Reply with quote

rudyflyer wrote:
This is good info for people though I'm not sure if hogwon teachers can get Korean CC's.


Korean credit card issuance (for non-Korean citizens) is a bit reminiscent of Korean immigration -- there are nominal rules, but everyone gets a different result that depends on what office you visit, what you want, and who you talk to.

AFAIK, there is no Korean law or regulation that prohibits the issuance of credit cards to foreigners or restricts it to foreigners on the basis of employment, asset level, or income.

For those who want a Korean credit card, but who have had trouble obtaining one, here are some ideas:

1. Look into what sort of affiliations you have, or what you can join. As Rudyflyer mentioned, some issuer came to his campus looking to sign up teachers. A few years ago, an issuer targeted members of the American Chamber of Commerce in Korea. There are Asiana and Korean Air mileage credit cards and a KORAIL credit card. Even the Buddhist order that runs Jogyesa in Seoul has its own co-branded credit card. Being a member of an organization may be an in to getting one.

2. Have a Korean co-signer.

3. Try to get a card issued by a bank at which you have had an account for a year or more. Bring documentation showing your good credit history in Korea (i.e., phone bill and utility bill payments). Have your employer issue you a document called a "jaejikjeungmyeongseo" (재직증명서) and take it with you. This is a document that verifies your employment status and is required for many Korean financial transactions. If you are applying at your own bank, they will have proof of your income (assuming you have direct deposit), which is also necessary. If not, make sure you bring verification of your income.

As always, wear nice clothes and present yourself well. It will be much harder for the bank to dismiss you when you are prepared and state your case well. If you can use Korean, so much the better.

4. Whenever you find an application form for a credit card, fill it out and send it in with whatever documentation it asks for. They may just issue you one. Or go online and fill out an online application. However, this is one situation where it won't be helpful to have a fake citizen ID number.


A couple of other points:

1. Remember that just because you had an account back home with Citibank, Bank of America, and the Bank of Nova Scotia and they all have Seoul branches, this doesn't mean that they will treat you like a long lost friend. In fact, they don't care. The reasons for this are legion, but the point is that although the name remains the same, they are best thought of as different banks entirely. There are also 1001 arcane reasons why you cannot freely transfer money back and forth to North America using the Seoul branches of your home banks.

2. On a related note, unfair though it may be, your home country credit history counts for bupkus in Korea. Actually, for many, this is a very good thing. Of course, then again, your stellar Korean credit history you build up over years here also means nothing back home.

So, even if you have a great record with your Amex, Visa, and MasterCard back home, that won't help you here.
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