I thought this would be a good head start to spark some interest in topics in finance.

1. Are Credit Cards Evil?
Sumin Byeon <suminb@gmail.com>

2. Nothing is black and white in this world

3. Benefits
• Cashback
• Airline mileages
• Discounts at restaurants, gas stations, malls, theaters, hospitals,
amusement parks, bookstores and more
• VIP lounges at airports
• Secondary insurance for rental cars
• Other auxiliary services

4. Benefits
• Annual fees (no free lunch!)
• Restrictions may apply
• E.g., You have to spend $500 in the previous payment period to be eligible for benefits in
the current payment period
• Makes life much more complicated
• Which restaurants do I get a discount from?
• You have to order A with B that comes with C but you cannot order D in order to get a
discount
• That Asiana ticket is cheaper than the Korean Air’s by $20 but my credit card gives me 1.5
Korean Air mileages for every dollar I spend. How much are my Korean Air mileages worth?
• May encourage overspending

5. Delayed Payments
Spend $1,500
4/1 5/1 6/15/15
Pay $1,500

6. Delayed Payments
• As long as payments are made on time, there is no interest, no fees
• Cash in pocket is a power
• Earns you money (e.g., interests)
• Provides you a potential to earn money
• Inflation - a dollar today is not the same as the dollar of yesterday
• Your income (generally and hopefully) increases overtime
• As a rule of thumb, it’s always better to get paid as early as possible, pay as late
as possible

7. Delayed Payments
• Psychological trap that makes you believe you have more to
spend than you actually do
• Alleged for causing overspending
• 신용카드보다 체크카드 선호 이유는 '과소비 방지' <전자신문>
• 신용카드 사용자 중 반 이상이 충동구매 경험, 보도자료 <경기도뉴스포털>
• 나는 왜 카드를 잘랐나 <오마이뉴스>

8. Debt Amortization
Amortization refers to the process of paying off a debt over time
through regular payments. A portion of each payment is for
interest while the remaining amount is applied towards the
principal balance. [Wikipedia]

9. Debt Amortization
• Makes it possible to purchase expensive goods or services at the
earliest convenience (e.g., hospital bills)
• Provides some level of protection when you make a lump sum of
payment for a long term service (e.g., haircuts, fitness clubs) and
they go out of business in the middle of the contract
• '할부항변권'이란 계약을 철회할 수 있는 기간이 지났다 하더라도 할부금 지급을 거절할 수
있는 권리로서 소비자가 20만원이 넘는 물건을 3개월 이상 할부로 구입한 뒤 합당한 이유
가 있을 때 할부금 잔액을 내지 않아도 되는 권리를 말합니다 [금융감독원, 금융소비자보호
백서 (2011), 368면]

10. Debt Amortization
• Induces obscurity in bookkeeping
• How much have I spent so for in this month?
• How much can I spend in the remaining days?
• May incur interests and/or fees

11. Building Credit History
• Credits are collateral in modern society
• Without the help of credits, borrowers must present some tangible
assets (e.g., houses, cars, factory equipments, etc.) as a collateral
• Collateral is a borrower’s pledge of specific property to a lender, to
secure repayment of a loan [Garret][O’ Sullivan]
• Generally a good idea to start building credits at early ages
• Higher credit scores lead to lower interest rates

12. Tax Returns
• (NOTE: Here we are mainly concerned about income tax)
• In Korea, tax laws favor debit cards over credit cards
• For spendings that exceed 25% of your annual income in any fiscal
year
• 30% of tax deduction with debit card spendings
• 15% of tax deduction with credit card spendings
• Up to 3,000,000 KRW

13. What do you think?
Would you use credit cards?
Why or why not?