Are Korean Credit cards too expensive and too cheap?

Merchants in Korea are being screwed.  Credit cards are very expensive to process here, about twice the cost of Australia and Australia is a lot larger country with far fewer people.  These fees need to fall.

My credit cards are actually too cheap here.  I have 2 visa cards at w5,000 per year of which one of the has the fee waved if you spend more than w1,000,000  a year (less than $1000) and my Diners Club card is w30,000 per year.  All cards include rewards in either discounts or points.  How can these cards be so cheap?  A Diners Club card in Australia costs $135 plus $77 for rewards.  In the USA a Diners Club card costs $75 and in the UK it costs 50 pounds.  Perhaps an increase in fees could reduce the amount of plastic issued in Korea, however who would move first?

Car loans - Watch this space

If you like me are a foreigner in Korea, you may find it very difficult impossible to get a car loan.  We are told we are a flight risk.  We are told our Korean partner must guarantee the loan.

Today I have written to one of the capital companies asking if they were refusing loans based on race.  If they don't answer or give an affirmative answer I will be filing a complaint against them with the National Human Rights Commission next Friday.

It's game on.

A new insurance company is needed.

I missed the boat to give feedback on the Foreigner Financial Supervisory Service recently.  But the other big problem for foreigners living Korea is caused by insurance companies.


I recently heard a story of someone who had been a customer of a major car insurance company for several years and they refused to renew the "blood money" component of his policy because too many foreigners had been making claims.  Since when is it acceptable to make a judgement based on race?


I want to buy a property, I cannot get mortgage insurance because I am foreigner.
I want to buy a car, I cannot get a loan because the insurance company won't insure the loan of a foreigner.
I need a jonsae loan, I cannot get it because the insurance company won't insure a loan for a foreigner.

The common problem is the insurance companies.  The banks are changing but the insurance companies are dragging their feet.

It's time to to form an insurance company for all people who live in Korea, one that won't discriminate on the grounds of race.  One that will allow all Korean residents access to the financial products they need to grow their wealth, protect their families and to help them contribute to this great country in which they choose to live.

The Foreigner Supervisory Service?

The Financial Supervisory Service (FSS) has produced a brochure Ten Helpful Hints for Making Financial Transaction in Korea. 

Let's go through the 10 hints they make:

1. Provide proof of identity when you open a bank account. Okay, but they are saying that Alien Cards will no longer be accepted as proof.  I have mixed feelings about this.  Many people prefer to use their drivers licence as it prevents a lot of you can't you're foreign excuses.  However for those that don't drive, carrying passports around is risky. The fine for losing an Australian Passport is AUD$100 in the first instance plus the cost of a replacement passport is AUD$226.  I don't want to carry my passport outside the house unless it is vital.  The rationale behind this is that an Alien Card cannot be verified, I'm sorry but this is not true.  Verification of Alien Cards happens and is possible under the Telecommunications Act;
2. Designate a correspondent bank for foreign exchange transactions, I have not given up hope that someone will explain the sense of this regulation one day, as it is completely pointless, anti-competitive and discriminatory;
3. Use Internet banking and specialised remittance service, this is a good tip.  Transferring money in branch inefficient and inconvenient;
4. Get a debit card instead of a credit card, getting even a debit card can be difficult and there is a difference, I suggest shopping around for what you want;
5. Enroll in foreign worker insurances and get your insurance money, good hint, but usually employers are the main offenders for not registering for these insurances.  Avoid the independent contractor scam;
6. Take out private insurance for additional coverage, a good hint, but the FSS says that refusing to sell insurance to foreigners who cannot prove Korean language ability is legal.  Yes it makes sense, to a point, but will you deny my Korean wife and daughter the benefits of insurance because I cannot speak Korean?
7. Note that a variable insurance is a dividend-paying policy based on investment performance, say no to these policies. In the words of P.J. O'Rourke complexity beyond a certain point is fraud.  Unfortunately Koreans love this type of policy where you pay your insurance and you get a lump of money in 10-20 years.  I am taking a bath on the policy my wife likes, it's expensive and should anything happen to me it doesn't provide for my wife and daughter.  Luckily I still have some Australian insurance coverage;
8.  Show proof of auto insurance subscription abroad to get discount on Korean auto insurance, great tip; 
9. Apply for an investment registration certificate (IRC) at the FSS to trade Korean listed stocks, more pointless paperwork;
10. Click on online sources of information on Korea’s capital market, see my sidebar.

What's in a number?

One of the frustrations of many foreigners in Korea is that our ID numbers won't work with many computer systems as they are different to Korean's ID numbers.  A Korean ID number takes the form of YYMMDD-XYYYYYY where X is 1, 2, 3 or 4 for most Korean citizens, 5 or 6 for foreigners, and 7 is a specific number allocated to people who make international transactions, to allow the tracing of all transfers without the need for stupid foreign exchange bank declaratory forms.

Korean citizens who hold permanent residency in another country lose their original number and have to apply for a 5 or 6 number, the logic for which escapes me.

I don't want a new number, I want my number to work.  If you go somewhere and they tell you they can't handle your ID number, make some noise, I do.
 

Korean Base Rate Raised to 3.25% - Credit Card Companies Also on Notice.

The Bank of Korea raised it's base rate 25 basis points to 3.25% on June 10th (sorry it's late).

Of more concern to the Korean economy is the Financial Supervisory Services notification to credit card companies that they want them to curtail their debt issuance and marketing expenses.  The FSC is threatening weekly inspections and bans on new card issuance should the companies not comply.  Korean household debt is running at high levels.  Hopefully everyone in Korea has learned from the last credit card crisis.

Internet Banking in Korea

Due to the absence of personal cheques and the former maximum won note being w10,000 (approximately USD$9.34 on May 3rd at 1.34pm) Internet Banking is a very popular way to pay bills and manage money in Korea.

With Internet Banking it is possible to instantly transfer money to anyones account in Korea, it is also possible to send money abroad, open new accounts, and review your transaction history depending on your bank and their policies.

To get Internet Banking you will need to visit a bank branch and register for Internet Banking not all banks offer English Internet Banking so if you don't know Korean, you will need to change banks.  If they tell you can't have Internet Banking  for 3 months you can call the bank's English helpline, or just leave and find another bank or branch that has adequately trained their employees.

When you have registered you will need to log in and download a certificate onto your computer.  Many banks tend to only operate on Internet Explorer and Windows, although this is changing Mac users probably won't be able to use Internet Banking.
Once you have a certificate you can use it with other banks as well provided that you have registered with them for Internet Banking.  The certificate will also allow you to logon to the National Pension Office, the National Tax Service and many other useful webistes, so guard your certificate and password carefully.

If yoiu have registered that your bank is your primary foreign exchange bank you will also be able to complete overseas trnsfers from the comfort of your own home.  This can be useful for people that find visiting a branch difficult although you will need to visit a branch at least once.