Obvious but unpracticed things related to credit card usage

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What you should be aware of 

  1. Credit or debit card companies are liable for most of illegal payments made using lost or stolen card

“Where a credit card holder or a debit card holder reports to a credit card company on loss or theft of the card, from that time, the credit card company shall be liable to the credit card holder or the debit card holder for use of the credit card or the debit card.” (Article 16-1, Specialized Credit Finance Business Act)

However, credit and debit card companies are responsible for the reimbursement only if the credit or debit card holder is not liable for loss or leak of pin number.

  1. Card holders may be partially responsible for the loss of their card under certain cases

If a stolen card does not have the holder’s signature on the back, the holder might only get a small amount of repayment from the card company.

Card companies are not obliged for reimbursement when the holder lent or handed over his or her card to someone else and payments are made using that card by a third party.

  1. Credit card member stores are liable for reimbursement in case they didn’t ask for customer’s signature when making credit card payments worth KRW 50,000 or more.

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What you should do

  1. Report immediately to respective card companies in case of loss of theft of card.
  2. Be sure to write your signature on the back of your cards and put the same signature when making card payments.
  3. Pin numbers should be kept completley secret and should be something that no one else can guess.Do not lend your cards even to your closest family.

Public fund Recoupment

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Recovery of Public Fund I* 

During the period from November 1997 to September 2014, the government provided public fund worth total KRW 168.7trillion from which KRW 107.5trn (63.7%) have been recouped so far.

Recovery rate(%): 57.0(end-2009), 59.9(end-2010), 60.9(end-2011), 62.5(end-2012), 63.4(end-2013), 63.7(Sep. 2014)

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Recovery of Public Fund II**

Total KRW 6.1693trillion was provided during the period from June 2009 to September 2014. 88.2% or KRW 5.4436trn has been recouped so far.

*Public fund raised during the 1997 Asian economic crisis to finance liquidation of insolvent financial institutions.

**Public fund created in response to the 2008 global financial crisis to resolve financial market instability.

5.94% of the bids made for Woori Bank minority shares auctioned off

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The Korea Depository Insurance Corporation(KDIC) on December 4 auctioned off 5.94% of the bids made for Woori Bank minority shares o/ut of the total 23.76%. As announced earlier, the successful bidders wil be granted call options accounting for 50% of the winning bid.

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Please read the press release for detailes -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=94038

Bail Out

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Typically, when a business collapses, the government or other businesses and financial institutions offer money to help them recover. Especially if the business has a lot of people and their interests involved, the government provides some kind of a financial aid, either to be reimbursed or not reimbursed. Such action is called “bail out”. One of the most well-known examples of bail out would be the one during the US financial crisis in 2008. When the banks and several companies collapsed and went bankrupt, the government provided nearly USD700 billion to help them recover. On top of saving these institutions, there were far too many people affected by the crisis that governmental aid was necessary. 

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Bail out is not only restricted to businesses and corporations. It can also be used when a country is in a severe financial crisis. When a country faces a severe debt crisis and is not able to pay back, it may get some help from other nations or international financial organizations like the International Monetary Fund (IMF). When bail out begins, money is either lent or given for the country or company to use to get out of the crisis. After sometime, when it recovers to a certain degree in which its financial providers feel that it could become more independent, especially in terms of employment and the overall management, it is then left to operate on its own.  

The Greek debt crisis has been an ongoing issue for some time. As a member of the Euro Zone, European Union members came together to offer bail out. As Greece faced financial crisis, the whole EU was affected in terms of currency rate. Its currency value depreciated, although the crisis was not the only contribution to such happening.  

As there is a vast network of intertwined interests, bail out not only rescues a business or a country alone, but also may reduce the impact received by other institutions or countries. Although not always successful, it can make a business or a country profitable again. From the crisis to its recovery, the bailed out member may contribute to the economy even more actively.

Check insurance policy details more conveniently

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Presently, insurance policy holders have to visit websites of Korea Life Insurance Association and General Insurance Association of Korea separately according to insurance coverage in order to check details related to the policies they purchased. However, from December 1, they will be able to check insurance details all at once by visiting either one of the websites.

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Moreover, customers have been complaining about the inconvenience related to personal identification verification process when making online inquiries on insurance policies since the current insurance websites only support verification method using accredited certificate. Upon implementation of the new system, customers will be able to use their cell phones when verifying personal identification starting from mid-December.

Quantitative Easing

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Money circulates around the world, in different currencies and different amounts. Every currency has its own degree of competitiveness, which is measured by the exchange rate. If your country’s currency depreciates, then its value goes down, which makes it cheaper for other currencies to exchange into your currency. On the other hand, if the currency appreciates, then other countries can buy less of it with every unit of their currency.  

The currency rate is determined by the market. As trade and direct currency exchange take place, currency rate either depreciates or appreciates in relation to other countries’ currencies. However, at times, it could also be controlled by the government. According to the principles of economics, in order to encourage spending, there has to be more money circulating in the market. Also, banks have to offer low interest rates in order to encourage loaning and further spending. Therefore, when money does not circulate enough in one’s country, the government sometimes implements fiscal policies to increase the circulation. This process is called “quantitative easing”.

 In addition to more circulation of money domestically, as trade plays a large role in lots of countries these days, currency depreciation is done through quantitative easing. What this means is that, as lowering the currency value of a country makes it more attractive for the other countries to trade with that country, the government lowers the currency value to encourage more trade. Through this, the country can benefit financially from selling more of its products abroad.

Quantitative easing is done through purchasing securities. The banks purchase securities from the government and the market in order to increase the money supply. At the government-level, it may sell its bonds to other countries’ governments. Consequently, as the money circulation increases, the interest rates go down and the currency value further goes down. Moreover, as the overall liquidity of the country increases, people can borrow money with lower interest rate.

In addition to all the lucrative sides of quantitative easing, there is also the negative side. Looking at it from the domestic perspective, as there is more money in the market, quantitative easing may, and usually does, lead to higher inflation. The overall economy increases, but the price of goods and services in the country increase as well.

This is a strategy used by some countries throughout the world, the biggest examples being China and USA. It has also been reported recently that Japan is going through the same process. Countries strategically implement such policy while making sure that not every country is doing it at the same time. It is very difficult to strictly say whether quantitative easing beneficial or harmful, it does bring both benefits and side effects.