Worker Lee Mo (49) recently issued a credit card with an annual fee of 500,000 won. Although the annual fee is much higher than the previously used credit card, the benefit of earning airline miles was appealing to them. Lee said, "I plan to travel abroad more than once a year, and I decided to get this card to receive seat upgrade benefits with accumulated miles each time I travel," adding, "Even though the annual fee is expensive, I don't regret it when I think about the convenience during long-haul flights."
Recently, a polarization phenomenon has been notable in the choice of credit and debit cards. While some consumers enjoy various benefits from using premium credit cards with annual fees exceeding 300,000 won, the 'frugal tech group' utilizes debit cards to pursue practicality.
According to the card industry on the 13th, Shinhan Card recently launched a premium card, 'The BEST-X,' with an annual fee in the 300,000 won range. This is the first time Shinhan Card has launched a premium card in six years since 2019. Last month, Lotte Card also introduced the 'Hilton Honors Amex' card, which has an annual fee of 250,000 won and 500,000 won. This premium card, in collaboration with the global hotel chain Hilton and the American credit card company American Express, provides various benefits when staying at Hilton hotels.
The reason card companies are continuously introducing premium cards is due to high revenue. Last year, Hana Card achieved about a 30% increase in net profit thanks to the success of its premium brand, the 'Jade' card. The 'Jade' card recorded unprecedented results, selling 100,000 copies within 10 months of its launch.
From the consumers' perspective, premium cards offer higher points accumulation rates or more cashback compared to regular cards, making them highly usable. It is advantageous for customers who accumulate airline miles or spend at a certain level for hotel stays and lounge access. There are also advantages to enjoying high-end services such as airport lounge access, hotel room upgrades, and concierge services (shopping and travel booking assistance). Some customers strategically choose premium cards to improve their credit ratings and obtain favorable terms in financial transactions.
On the other hand, the 'frugal tech group,' which aims to reduce expenditure in this era of high prices, is actively utilizing debit cards. According to the Korea Credit Finance Association, as of the end of last year, the total number of debit cards issued by eight card companies, including Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Hana, Woori, and BC Card, reached 62.88 million, a 2.6% increase compared to the same period last year. In particular, Hyundai Card, a corporate card issuer, saw a significant surge in debit card issuance in the fourth quarter of last year, with 620,000 cards issued, a 27.6% increase compared to the same period the previous year (480,000 cards).
Unlike credit cards, debit cards can only be used to pay the amount remaining in one's account, preventing overspending. It allows for planned spending without the temptations of installments or revolving credit agreements associated with credit cards. Most debit cards have no annual fee, relieving any added burden. Cards that provide practical benefits, such as discounts on public transportation, communication fees, and supermarket discounts, are also available, allowing for additional savings. They are a practical choice for users focused on small expenditures.
A card industry official noted, "These days, it seems the card market also works well at both extremes," adding, "Influenced by social media (SNS), there is a trend towards a high-end lifestyle on one side, while on the other side, there is a prevailing atmosphere of 'frugal tech' in the tough economic situation."