South Korean credit card issuers have begun lowering or waiving the fees they charge for cash advances, an official from the Credit Finance Association of Korea tells PaymentsSource.
“Banks are aggressively lifting or lowering cash advance service fees for credit cards that they issue, while nonbank credit card firms are reducing their cash advance service charges slightly,” the official says. “Banks can do so because they have higher profits than card firms, so they don’t really need to keep charging high fees for cash advances.”
Hana Card, BC Card, SC First Bank, Industrial Bank of Korea and Shinhan Bank all have waived their charges on cash advances, according to the official.
Credit card issuers began charging fees for cash advances in 2003 as loss protection when collective credit card debt topped US$100 million and the government had to bail out the country’s largest issuer, LG Card.
They began scaling back in response to the Financial Trade Commission’s statement earlier this month that the fees were unfairly high for cardholders, the official adds.
“Cash advances usually have an average annual interest rate of around 4%,” the official says. “Till now, cardholders were paying two types of fees for cash advances, one for using the service and another for interest on the loan."
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