By the end of 2024, the number of dormant credit cards - those left unused for more than a year - had climbed to 19.41 million, a sharp increase from 12.99 million in 2021. That figure accounts for roughly one-third of all new credit cards issued.
Card issuers cite rising production costs - between 10,000 won ($6.88) and 15,000 won per card - as justification for higher annual fees. Yet, industry data shows that these fees have become a lucrative revenue stream, with collections rising from 1.13 trillion won in 2021 to 1.33 trillion won in 2023.
“There’s little incentive to address the dormant card issue when raising annual fees provides an easy solution to cover costs,” said an executive at a major credit card company, speaking on condition of anonymity.
A decade ago, many credit cards charged annual fees as low as 2,000 to 5,000 won. Those options have largely disappeared, with most cards now commanding fees exceeding 10,000 won.
Beyond financial costs, dormant cards can negatively impact credit evaluations.
The Korea Credit Information Services (KCS) considers card-related data when assessing credit limits, particularly for individuals holding three or more credit cards.
The surge in inactive cards is largely driven by aggressive competition among issuers, particularly with the proliferation of Private Label Credit Cards (PLCCs).
These co-branded cards, often launched in partnership with major retailers like Coupang, E-Mart, and Olive Young, lure consumers with short-term benefits but often go unused after initial promotions expire.
Regulatory policies have also played a role. Government restrictions prevent the automatic cancellation of dormant credit cards before their standard expiration - typically five years - contributing to the growing backlog of inactive accounts.
In response to the issue, banks and card companies launched a joint service last September to help users manage dormant cards. However, the initiative has gained little traction, with only about 1,500 users signing up to date.
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