---
title: "Is It Illegal for a Child to Use a Parent's Credit Card? Card Transfers and Gift Tax Rules"
locale: en
category: policy_guide
category_name: "Policy Guide"
translation_status: reviewed
license: cc_by
author: "Injoys Editorial Team"
source_url: https://injoys.com/en/articles/child-using-parent-credit-card-korea-law-gift-tax
published_at: 2026-08-07T23:39:48+09:00
---

# Is It Illegal for a Child to Use a Parent's Credit Card? Card Transfers and Gift Tax Rules

> A child is not permitted under card terms to use a credit card issued in a parent's name, and transferring the card and the authority to use it may be subject to criminal penalties if it constitutes a transfer under the law. The economic benefit received when a parent pays a child's personal expenses may be subject to gift tax unless it meets the requirements for the living-expense exemption or gift property deduction.

## Key Points

- Even with the cardholder's consent, a child's unrestricted use of a credit card issued in a parent's name does not become lawful.
- Transferring or receiving a credit card may be punishable under the Specialized Credit Finance Business Act by imprisonment for at most 1 year or a fine of at most 10 million won.
- A transfer offense is not automatically established merely because the card was used once to make a payment on someone else's behalf; the circumstances and manner in which the card and authority to use it were transferred are also considered.
- If ordinary living or educational expenses were provided to a child in need of support and spent directly for those purposes, they may not be subject to gift tax.
- The 50 million won deduction for adult children and 20 million won deduction for minor children are gift property deductions applied over 10 years, not annual tax-free limits applicable to all card use.

Even if the parents have given permission, a child’s use of a credit card issued in a parent’s name as if it were the child’s own card is not permitted in principle. However, not every payment immediately constitutes a criminal offense, and the assessment under credit card law and gift tax law varies depending on **how the card was handed over**, **whom the spending was for**, and **whether the child repaid the amount spent**.

## First, the conclusion: Credit card issues and gift tax issues are separate

This issue must be divided into the following two stages for an accurate assessment.

1. **Legality of card use:** Determine whether the child received the card issued in the parent’s name and the authority to use it.
2. **Whether gift tax applies:** Determine whether the parent paid the card bill for the child, allowing the child to receive an economic benefit without compensation.

A violation of the card’s terms and conditions does not mean that gift tax applies to every expense. Conversely, even if the child used a family card formally issued by the card company, a separate gift tax issue may remain if the parent paid the child’s personal expenses.

## Why is it a problem when a child uses a credit card issued in a parent’s name?

### The transfer and receipt of credit cards are prohibited by law

Article 15 of the Specialized Credit Finance Business Act prohibits transferring or receiving a credit card and creating a pledge over a credit card. Under the penalty provisions of the same Act, a person who transfers or receives a credit card in violation of this rule may be punished by **imprisonment for at most 1 year or a fine of at most KRW 10 million**.

However, it cannot be concluded that the statutory offense of transferring or receiving a credit card is automatically established merely because a child made a payment on someone’s behalf once. The following specific facts must be considered together.

- Whether the parent allowed the child to keep the card continuously
- Whether the child independently made payments according to the child’s own needs
- Whether the parent also handed over the PIN or online payment authentication method
- The duration, frequency, and amount of card use
- Whether the child purchased items for the parent while running an errand
- Who actually paid the card bill

Therefore, rather than saying that “a child’s single use is always a crime,” it is more accurate to say that **handing over a parent’s card and the authority to use it to a child is prohibited, and if the arrangement constitutes a transfer under the law, it may be subject to criminal punishment**.

### Parental permission does not make it normal use by the cardholder

A credit card is a payment instrument intended for use by the member whose name appears on the card. Standard terms and conditions for individual credit card members and card company terms generally prohibit members from allowing third parties, including spouses or family members, to use their cards.

The fact that a parent gave permission is important when determining whether the card was stolen or used without authorization, but it does not make the child an official cardholder. Violating the terms and conditions may result in suspension of card use or termination of the contract, as well as limitations on compensation or disputes over liability for card charges if an incident occurs.

If the card was used without the parent’s consent, the matter may go beyond a simple breach of the terms and conditions. Depending on how the card was used, separate criminal issues such as fraud, theft, or unauthorized use of an electronic payment authentication method may need to be examined.

## A gift may arise if the parent pays the card bill

For gift tax purposes, what matters is not whose name is on the card itself, but **whether the child received an economic benefit without paying compensation**. If the child uses the parent’s card to purchase goods or services for the child and the parent pays the bill, a gift tax issue may arise because the parent may be regarded as having paid the child’s debt or consumption expenses on the child’s behalf.

By contrast, there may be no amount gifted to the child, or the amount may be reduced, in the following cases.

- The child merely purchased items for the parent and did not receive any benefit
- The child actually repaid the parent the entire amount spent
- The money was lent by the parent to the child, and the repayment terms and actual repayment history can be verified
- The expenses qualify as ordinary living expenses or educational expenses that are tax-exempt by law

To substantiate a claim of repayment, it is advisable to retain bank transfer records, card statements, and settlement records. If only a formal loan agreement is prepared afterward and no actual repayment is made, the transaction may not be recognized as a loan.

## When are living and educational expenses exempt from gift tax?

The Inheritance Tax and Gift Tax Act provides that certain property, including living expenses and educational expenses recognized as reasonable under generally accepted social norms, is exempt from gift tax. However, not every expense becomes a living expense merely because a parent paid it.

The following conditions are generally considered together.

- Whether the parent needs to support the child
- Whether the child can afford the expense with the child’s own income and assets
- Whether the amount is ordinary in light of the family’s financial circumstances and generally accepted social norms
- Whether the money provided was directly spent on living or educational expenses
- Whether it was not used for savings, investment, or acquiring property

| Spending example | General direction of tax assessment |
|---|---|
| Food, housing, and tuition expenses for a child who needs support | May be tax-exempt if directly spent within an ordinary range |
| A child pays for household necessities used with the parents | May be difficult to regard as a gift to the child personally |
| The child repays the parent the same amount after using the card | May not be a gift if actual repayment is verified |
| Expensive luxury goods, excessive travel expenses, or extravagant spending | More likely to be denied the living expense exemption |
| Purchasing gift certificates with the card or converting them into cash for savings or investment | Highly likely to be taxable because the funds were not directly spent on living expenses |
| The parent pays the acquisition cost of assets such as a vehicle or real estate | More likely to be treated as a gift than as ordinary living expenses |

The fact that the child has no income is an important factor, but it is not an automatic condition for tax exemption. Conversely, the fact that the child has income does not necessarily mean that all living expenses paid by the parent are taxable. The actual need for support, the purpose of the expenditure, and the amount are considered together.

## The exact meaning of the KRW 50 million and KRW 20 million deductions over 10 years

The basic gift property deductions applicable to gifts received from parents or other lineal ascendants are as follows.

| Child receiving the gift | Gift property deduction over 10 years |
|---|---:|
| Child who is an adult as of the date of the gift | KRW 50 million |
| Child who is a minor as of the date of the gift | KRW 20 million |

These amounts are not limits permitting the child to “spend this much on the card.” Nor are they limits that reset each year. The deduction is applied after reviewing gifts received from parents or other lineal ascendants during the 10 years preceding the relevant gift date.

Amounts that are tax-exempt from the outset because they are recognized as ordinary living expenses must also be distinguished from the gift property deduction. Amounts satisfying the requirements for the living expense exemption are excluded from taxable gifted property, whereas the deduction is applied after taxable gifted property has been calculated.

## Gift tax rates do not apply directly to the entire amount spent on the card

Gift tax rates are applied progressively from 10% to 50% according to the tax base.

| Tax base | Tax rate | Progressive deduction |
|---:|---:|---:|
| At most KRW 100 million | 10% | None |
| More than KRW 100 million and at most KRW 500 million | 20% | KRW 10 million |
| More than KRW 500 million and at most KRW 1 billion | 30% | KRW 60 million |
| More than KRW 1 billion and at most KRW 3 billion | 40% | KRW 160 million |
| More than KRW 3 billion | 50% | KRW 460 million |

Therefore, it is inaccurate to simply multiply the amount spent on the card by 10–50%. Taxable gifted property must be aggregated, applicable deductions must be subtracted, and the progressive tax rate must then be applied to the resulting tax base.

For example, assume that an adult child received a total of KRW 60 million in taxable benefits from the parents over 10 years and that there were no other gifts or separate deductions. After subtracting the KRW 50 million gift property deduction for gifts from lineal ascendants, the tax base could be KRW 10 million. This example is intended to explain the calculation structure; the actual tax amount varies depending on the timing of the gifts, prior gifts, filing status, and individual deductions.

## Does failure to file taxes always result in criminal punishment?

If gift tax arises but is not reported or paid, penalties for failure to file or underreporting and late-payment penalties may be imposed in addition to the principal tax. However, the mere fact that gift tax was not reported does not mean that every case immediately results in criminal punishment.

If taxes were evaded through fraud or other improper acts, a separate issue of punishment for tax offenses may arise. A simple mistake, a dispute over whether tax applies, and an intentional act of concealment are legally distinct, so the specific facts must be examined.

In principle, the gift tax filing deadline is within 3 months from the last day of the month in which the gift was received. If card payments are repeated, determining the timing and amount of the gifts may become complicated. If substantial amounts were involved on an ongoing basis, it is advisable to consult a tax professional or the competent tax office.

## Safer alternatives and recordkeeping methods

### Use a family card issued in the child’s name

A family card issued after the card company screens the child as a family member is different from lending the parent’s physical card to the child. Because the actual user’s name appears on the card, it can reduce problems arising from a mismatch between the named cardholder and the user. Eligibility ages and conditions vary by card company.

However, a family card is merely a means of addressing the method of card use; it does not automatically provide a gift tax exemption. If the parent pays the family card bill and provides an economic benefit to the child, whether the living expense exemption and gift property deduction apply must be assessed separately.

### Keep records of the purpose of expenditures and settlements

The following records can help explain card use and whether a gift occurred.

- Card statements and receipts
- Documents showing the purpose of expenses, such as tuition, medical expenses, and rent
- Bank transfer records showing the child’s repayment to the parent
- Settlement records for shared living expenses
- For an actual loan, the loan amount, interest, maturity date, and repayment history

What matters is the actual transaction, not the name of the document. Even if there is a loan agreement, the transaction may be treated as a gift if no repayment is made. Conversely, even without a separate agreement, clear records showing immediate settlement of the full amount may support the conclusion that the transaction was not a gift.

## Key assessment table by situation

| Situation | Card-related risk | Gift tax assessment |
|---|---|---|
| The child keeps the parent’s card for an extended period and uses it freely | High risk of violating the transfer prohibition and the terms and conditions | A gift may arise if the parent pays the card bill |
| The child makes a one-time payment for the parent’s items while running an errand | The specific circumstances of use must be examined | Not a gift if the child received no benefit |
| The child uses the card and immediately repays the full amount | The issue of using a card issued in another person’s name remains | Low likelihood of a gift if actual repayment is verified |
| Payment of ordinary food or tuition expenses for a dependent child | Use of an official method, such as a family card, is recommended | Ordinary living and educational expenses directly consumed may be tax-exempt |
| The parent continuously pays for expensive spending by an independent child | Risk of violating the terms and conditions and being regarded as a transfer | Highly likely to be regarded as a taxable gift |
| Living expenses paid with an official family card | The issue involving the name on the card is reduced | Assessed separately according to the purpose and amount of the payment |

## Final summary

Parental permission does not mean that a child may freely use a credit card issued in the parent’s name. If the card was handed over for the child’s independent use, issues may arise regarding whether it constitutes a transfer under the law and whether it violates the card’s terms and conditions. When necessary, a method recognized by the card company, such as a family card issued in the child’s name, should be used.

Tax is a separate issue. If a parent pays the child’s personal expenses without compensation, it may constitute a gift. However, living or educational expenses recognized as reasonable under generally accepted social norms may be tax-exempt when paid directly for a child who needs support. If the amounts are substantial or recurring, card statements and repayment records should be retained, and the assessment should include prior gifts made over the preceding 10 years.

## FAQ

### If the parents give permission, may their child use the parents' credit card?
Permission alone does not make the child an official cardholder. If the parents' act of handing the card and the authority to use it over to the child legally constitutes a transfer, it may be punishable, and standard card terms and conditions also prohibit use by third parties, including family members.

### Is a child immediately subject to criminal punishment after making a single payment with a parent's card?
The offense of transferring a card is not automatically established merely because one payment was made. Whether it legally constitutes a transfer is determined based on the specific circumstances, including how long the card was held, whether the child had independent authority to use it, the purpose of its use, and whether authentication credentials were provided.

### Is it a gift if a child uses a parent's card to buy something for the parent?
If the child paid for an item for the parent as an errand and did not receive any economic benefit, it is generally difficult to regard it as a gift to the child. However, issues under the terms and conditions concerning the direct use of a card issued in another person's name may remain separately.

### Is there no gift tax if the child repays the parent for the amount charged to the card?
If the full amount was actually repaid, it is unlikely to be regarded as a gift because no benefit was received without consideration. Card statements and bank transfer records should be retained, and if there is only a nominal loan agreement with no repayment, it may be deemed a gift.

### Are all amounts charged to a card by a child with no income tax-exempt as living expenses?
No. In addition to whether the child has income, the need for support, the purpose of the expenditure, whether the amount is ordinary, and whether it was actually spent are considered together. If money provided as living expenses is saved, invested, or used to acquire assets, the tax exemption may not be recognized.

### Can an adult child spend up to 50 million won on a parent's card without incurring gift tax?
50 million won is not a permitted card spending limit but the gift tax deduction applied over a 10-year period when an adult child receives a gift from a lineal ascendant. It must be aggregated with previous gifts, and it is not a standard that resolves legal or terms-and-conditions issues concerning how the card is used.

### Does using a family card eliminate gift tax issues?
A family card is issued in the name of the child who actually uses it, reducing the issues associated with borrowing and using the parent's physical card. However, if the parent paid the child's personal expenses, the living-expense tax exemption or gift tax deduction must be considered separately with respect to that economic benefit.

### Is a gift tax rate of 10–50% immediately applied to amounts charged to a parent's card?
No. First, the taxable gifted property is calculated, the tax base is determined by reflecting previous gifts made over 10 years and any applicable deductions, and then the progressive tax rates of 10–50% are applied.

### Does failure to file a gift tax return always result in criminal punishment?
Failure to file or underreporting may result in the imposition of the principal tax and penalties, but not every failure to file immediately results in criminal punishment. If taxes are evaded through fraud or other unlawful acts, separate issues of punishment for tax offenses may arise.

## Sources

- [National Law Information Center Specialized Credit Finance Business Act](https://www.law.go.kr/법령/여신전문금융업법)
- [National Law Information Center Inheritance Tax and Gift Tax Act](https://www.law.go.kr/법령/상속세및증여세법)

## Images

![Parent and child with a blocked credit card and scales weighing a card, law, essentials, and luxury goods](https://injoys.com/rails/active_storage/blobs/proxy/eyJfcmFpbHMiOnsiZGF0YSI6NjI4NywicHVyIjoiYmxvYl9pZCJ9fQ==--b8595419d658360cacb78c9d4d673b2c8320c09f/ai-e37d0034.webp)
![Illustration comparing family credit card spending on living costs, education, luxury goods, property, and gifts](https://injoys.com/rails/active_storage/blobs/proxy/eyJfcmFpbHMiOnsiZGF0YSI6NjI5MywicHVyIjoiYmxvYl9pZCJ9fQ==--5e059c92cce2218708acdf7045aeb25f76fc3018/ai-8fee1328.webp)