[Smart Saving Life①] The Difference Between Deposits and Installment Savings "It's Not Difficult"

[Asia Economy Reporter Minyoung Kim] Surprisingly, many people do not know the difference between yegeum and jeogeum (deposit and installment savings). If you search for yegeum on a portal site, "difference between yegeum and jeogeum" even appears. Especially among teenagers and young adults just starting their careers, it is common to see cases where they cannot distinguish between yegeum and jeogeum.

First of all, yegeum and jeogeum share the same concept of saving. Saving means entrusting money to financial institutions with deposit functions such as banks, savings banks, and mutual finance companies, and receiving interest after a certain period. The decisive difference between yegeum and jeogeum lies in whether the money is deposited all at once or accumulated in installments.

Yegeum is a saving method where a lump sum is deposited to a financial institution once, and interest is received after 1 month, 6 months, or 1 year. On the other hand, jeogeum involves transferring money to an installment savings account weekly or monthly to accumulate funds. There is also a free installment type where the depositor can add money whenever they want.

For example, suppose you deposit 1,000,000 won into a yegeum account on January 1 and withdraw it after one year. The entire 1,000,000 won remains with the bank for one year, and you receive the principal plus one year's interest after one year.

Also, if you open a jeogeum account on January 1, you make the first payment that day, the second transfer on February 1, the third on March 1, and so on, making the twelfth transfer on December 1. Then how is the interest calculated? It would be nice if the bank gave one year's interest on this jeogeum as well, but here comes the concept of "pro-rata calculation." The money deposited on January 1 is calculated for one year like yegeum. From the next month, interest is calculated for 11 months, 10 months, 9 months, and so forth, with the money deposited in the last month earning interest for one month, and finally, the total interest on the jeogeum is calculated.

In summary, interest is compensation for the time the money is lent. Generally, yegeum offers about 1.5 times higher interest than jeogeum. This means that subscribing to a 2-3% yegeum rather than a 5% jeogeum can yield more interest.

This content was produced with the assistance of AI translation services.