KakaoBank Lowers Deposit Interest Rates... '1 Year at 1%'

[Asia Economy Reporter Kim Min-young] Even KakaoBank has joined the trend of lowering fixed deposit interest rates.

According to the financial sector on the 18th, KakaoBank lowered the interest rate on 1-year fixed deposits from the previous annual 1.25% to 1.00%, a decrease of 0.25 percentage points, starting today.

The interest rates for 2-year and 3-year fixed deposits were also reduced by 0.25 percentage points each, from 1.30% to 1.05% and from 1.35% to 1.10%, respectively.

Savings deposit rates were also lowered. The bank dropped the interest rate on flexible savings deposits from 1.30% to 1.10% for a 1-year term. Even with all preferential rates applied, the maximum savings deposit rate is only 1.50% for a 3-year subscription.

Earlier, on the 15th, K Bank, another internet-only bank, also cut deposit interest rates.

The 1-year maturity rate for its flagship product, ‘CodeK Fixed Deposit,’ was reduced by 0.15 percentage points from 1.45% to 1.30%.

The interest rates for ‘Main Transaction Preferential Fixed Deposit’ and ‘PlusK Fixed Deposit’ were also lowered by 0.15 percentage points and 0.30 percentage points, from 1.25% to 1.10% and from 1.05% to 0.75%, respectively.

This is due to the Bank of Korea lowering the base interest rate to 0.5% last month. When the base rate drops, loan interest rates also decrease, but if deposit rates remain unchanged, banks’ profitability deteriorates.

This is why major commercial banks and savings banks have also started lowering their interest rates following the Bank of Korea’s rate cut.

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