How to Avoid Pitfalls When Trying to Get Preferential Interest Rates? ... Financial Tips from the Financial Supervisory Service

[Asia Economy Reporter Kim Hyo-jin] Mr. A, who started working this year, saw an advertisement for a savings product offering up to 7% annual interest including preferential rates and signed up, only to find himself in a difficult situation. To meet the preferential interest rate conditions, he changed his salary account to the bank in question, obtained a credit card he hardly needed, and even subscribed to a savings insurance plan with a monthly payment of 100,000 KRW, which became too burdensome.

He also lost cashback benefits from the card he had been using. Mr. A considered terminating the savings or insurance early but is stuck because of interest losses and cancellation fees that are less than the principal.

Mr. B, who pays over 300,000 KRW monthly by card including apartment maintenance fees and public transportation fares, came across information on an internet cafe that using a card over 300,000 KRW monthly would grant a discount on communication fees, so he applied for the card online. Mr. B charged a total of 400,000 KRW on this card, but upon checking the bill, found no communication fee discount applied. After calling the card company’s call center, he learned that transportation fees and similar charges are excluded from communication fee discounts.

The Financial Supervisory Service (FSS) announced on the 5th that to prevent consumers like Mr. A and Mr. B from rushing into financial transactions and regretting them later, it has compiled "200 Financial Tips - Home-style Tips Helpful When Using Bank and Small-scale People’s Financial Products" and posted them on the financial consumer information site "Fine" (fine.fss.or.kr).

The FSS urges consumers to carefully consider whether a product suits them before choosing a financial product. It emphasizes the importance of fully understanding related details such as preferential interest rates and conditions for receiving additional services through terms and conditions, product brochures, and disclosures on websites.

By choosing products from small-scale people’s financial institutions such as savings banks and credit unions, which are protected up to 50 million KRW per person under the Depositor Protection Act, consumers can make investments without principal loss.

The FSS also advises consumers like Mr. B to thoroughly check the conditions for receiving credit card benefits such as discounts and points accumulation to avoid missing out on benefits despite meeting spending thresholds. Many payments such as various taxes, utility bills, apartment maintenance fees, the four major social insurances, university tuition, and prepaid card top-ups are often excluded from the "previous month’s usage amount" calculation.

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