[Practical Finance] Large Sums Without a Destination Become a 'Safe in Your Hand'

1-Year Maximum Interest Rate 'K-Bank'
Deposit 10 Million KRW, After-Tax 122,670 KRW
Internet Banks Like Kakao Bank Generally Higher
SC, IBK, KDB Online Rates Only in 1% Range

[Asia Economy Reporter Kim Min-young] ‘0.5%.’ This is the Bank of Korea’s base interest rate. Even when looking closely, it is still a hard-to-believe figure. It is truly an unprecedented ‘uncharted path.’

This year, the Bank of Korea lowered the base interest rate by 0.75 percentage points in two steps, joining South Korea to the ranks of ‘zero interest rate’ countries.

Between March and last month, the base interest rate plunged sharply from 1.25% to 0.5%, and experts predict that it will remain at zero interest rates for several years to come.

In the United States, after entering the zero interest rate era in December 2008, it took about nine years to raise rates to around 0.75~1.0%. After raising rates for about three years, the U.S. implemented a ‘big cut’?a 1 percentage point reduction from 1.00%~1.25% to 0.00%~0.25%?this year, reopening the zero interest rate era.

Following the base interest rate cut, deposit interest rates at commercial banks have also plummeted. It is common to receive interest in the 0% range even when depositing for one year. Depositing 10 million won yields only about 80,000 won in interest.

Nevertheless, depositing money in banks remains one of the safest investment methods. Conservative investors who say “I absolutely hate losing principal” or those who cannot endure the high volatility of stocks or real estate should pay attention to bank deposit products.

According to the Financial Supervisory Service’s integrated financial product disclosure site ‘Financial Products at a Glance’ as of the 10th, the highest 1-year fixed deposit interest rate among major banks is offered by K Bank. Although it is an internet-only bank, it holds the status of a first-tier financial institution. Without physical branches, it can offer relatively higher interest rates. Its ‘CodeK Fixed Deposit’ product offers an annual interest rate of 1.45% including preferential benefits, which yields 122,670 won after tax on a 10 million won deposit.

Next are Gwangju Bank’s ‘Solsolhan My Cool Deposit’ and Jeonbuk Bank’s ‘JB Direct Deposit Account,’ both affiliated with JB Financial Group, offering 1.40% interest rates.

Gyeongnam Bank’s ‘BNK The Joeun Deposit Account’ has a base interest rate of 1.25%, but offers an additional 0.2 percentage points for new deposits over 30 million won, providing up to 1.45% interest.

Kakao Bank, also an internet bank, offers a fixed deposit interest rate of 1.25%.

Large banks generally offer lower interest rates, but there are deposit products that are like a blessing in a drought, and these products share the common feature of requiring mobile or internet subscription.

Products that offer preferential interest rates for non-face-to-face (untact) subscriptions maintain interest rates in the 1% range. SC First Bank’s ‘e-Green Save Deposit’ offers 1.10%. This product is an online-only product available via internet or smartphone application (app).

IBK Industrial Bank’s ‘IBK D-Day Account’ is also an untact product available only via smartphone, offering 1.08% interest.

KDB Industrial Bank’s ‘KDB Hi Fixed Deposit’ and IBK’s ‘IBK First Meeting Deposit’ offer 1.05% and 1.04% respectively, both untact products.

There is also an online product that offers 1.40% interest when joining through a friend’s recommendation. NH Nonghyup Bank’s ‘e-Interest Preferential Deposit’ has a base interest rate of 1.00%, but if you spend over 1 million won on the NH Chaeum Card, you get an additional 0.1 percentage points, and both the referrer and the subscriber receive 0.3 percentage points preferential benefits.

Woori Bank sells the ‘Kiwi Fixed Deposit’ (fixed type) product that offers 1.10% interest for Royal grade or higher customers who deposit over 30 million won. Woori Bank divides customers into Family, Royal, Honor, and Prestige grades to provide preferential services.

Shinhan Bank’s representative fixed deposit product, ‘Solpyeonhan Fixed Deposit,’ barely maintains an interest rate in the 1% range at 1.05%.

Special promotional (special sale) products are also worth considering. Shinhan Bank recently launched the ‘Shinhan 11th Street Fixed Deposit’ with Shinhan Card and online shopping site 11th Street, offering up to 3.3% interest. The base interest rate is 0.80%, but if you newly subscribe to the open banking service, you get a 0.3 percentage point preferential rate, and if the first payment with the ‘11th Street Credit Card’ is over 110,000 won, an additional 2.2 percentage points reward is provided at maturity. It is a 3-month product with a maximum subscription of 3 million won. It is sold only to the first 100,000 customers via Shinhan Bank’s mobile app ‘Sol’ or mobile web.

These days, banks rarely offer special promotions, so it is necessary to pay attention to special sale news reported in the media or on social networking services (SNS).

Turning to savings banks, you can receive more generous interest rates. According to the Korea Federation of Savings Banks, the average 1-year fixed deposit interest rate at savings banks reaches 1.88%. Live Savings Bank offers the highest rate at 2.20%, followed by Smart Savings Bank, Dongwon First Savings Bank, and Double Savings Bank at 2.15%.

Among the top-tier institutions, JT Chin-Ae Savings Bank and Korea Investment Savings Bank offer 2.10% for untact products, Pepper Savings Bank 2.05%, Aequan Savings Bank 2.00%, Welcome Savings Bank 1.95%, and OK Savings Bank 1.80%. If you are worried about the insolvency of savings banks, you can distribute deposits up to 50 million won per bank. Under the Depositor Protection Act, the government guarantees up to 50 million won including principal and interest.

There is a possibility that bank deposit interest rates will be further lowered in the future, so if you want to lock in a large sum, it is better to hurry. A representative from a commercial bank said, “Although the attractiveness of bank deposit products has declined due to the base interest rate cut, they are almost the only products that guarantee principal,” adding, “Especially for young adults who have just started saving and do not have large sums, or middle-aged people who need to use their savings as living expenses in retirement, it is the easiest financial management method.”

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