Foreigners with as little as W1.6m can now get a credit card — and issuances have jumped 13-fold

"You're saying I can get a credit card by putting up a deposit as collateral, even without a credit history in Korea?"

As the number of foreign customers at Korean banks has grown to about 7 million, interest in deposit-secured credit cards — designed for foreigners with little or no domestic credit history — has surged. At Shinhan Bank, foreigners account for more than 85 percent of deposit-secured cardholders, and the cards are used primarily for everyday spending: dining out, online shopping and grocery runs.

Shinhan Bank's deposit-secured credit card tailored for foreign customers — marketed as a quick and easy product — saw issuances over the past year reach roughly 13.1 times the bank's full-year 2024 total, according to data reviewed Friday. The deposit-secured credit card is issued against a fixed-term bank deposit held as collateral. The average deposit pledged as collateral stood at 1.6 million won ($1,190).

The card is particularly popular among foreigners because it can be issued without a domestic credit history. It offers the same benefits as a standard credit card and includes a postpaid transit card function. Foreigners make up more than 85 percent of Shinhan Bank's deposit-secured cardholders, who collectively hold citizenship in 43 countries. Chinese nationals account for the largest share at 39.8 percent, followed by Vietnamese at 8.4 percent, Americans at 5.1 percent, Mongolians at 2.7 percent and Nepalis at 2.2 percent.

Shinhan Bank said issuances of the deposit-secured card to foreign customers had been declining since 2023 before jumping sharply after the bank overhauled its application process in mid-August last year. "We digitized the entire application process, introduced automated eligibility screening and added multilingual consultation services, cutting the time needed to apply from over an hour to about 10 minutes," the bank said.

The roughly 7 million foreign customers now banking in Korea are increasingly seen as a new growth engine for an industry facing saturation in the domestic market. Analysts note that foreigners tend to consolidate their financial lives — payroll accounts, card payments, overseas remittances and loans — with a single bank, creating a strong lock-in effect once acquired. An everyday spending card can serve as the entry point that draws foreign customers into a broader banking relationship.

Among deposit-secured cardholders, the top spending categories were dining out, payment gateway services, e-commerce, discount stores and supermarkets, home appliances and gas stations. Cardholders used the cards not only for meals, online shopping and groceries but also for home appliance purchases and fuel. Industry observers say card rewards and promotions in those categories, along with the need to buy home appliances for daily life in Korea, likely drove the pattern.

Spending patterns also differed between foreign and domestic cardholders. E-commerce and dining out ranked among the top categories for foreigners, while taxes and utility bills led for Koreans. Insurance and hagwon payments featured prominently in domestic spending but were far less common among foreign cardholders, who also ranked telecommunications services relatively low. Convenience store transactions were small in value but notably high in frequency.

As demand for credit cards among foreigners grows, financial regulators are preparing a new issuance framework for customers with limited financial histories. The Financial Services Commission plans to introduce in December a system that would extend credit card access to people — including youth and foreigners — whose repayment capacity is difficult to assess using conventional financial data alone. Under the scheme, customers would place a deposit as collateral and use the card within that limit.

The specific deposit amount and credit limit have yet to be determined. Industry insiders say setting both in the range of 1 million to 2 million won is the most realistic option under discussion. Shinhan Bank's average credit limit for its foreign deposit-secured card — about 1.6 million won — already falls within that range. Regulators plan to finalize the details after gathering input from the card industry.