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Toss, K Bank, and Others Offer 2% Interest Rates on Deposit Products

[Asia Economy Reporter Kim Jin-ho] Self-employed Park Jung-wook (35, pseudonym) recently canceled all his bank savings and deposit products. Although he saves a considerable amount every month, he felt the interest rates were absurdly low. After hearing that the base interest rate would rise twice more by early next year, Park decided to keep all his money in a demand deposit account for the time being. Following a friend's recommendation, he put all his money into a Toss Bank demand deposit account. He was highly satisfied as the interest rate was 2% per annum, double that of his previous savings and deposit products.

Amid the interest rate hike period, consumers aiming to earn even a little more interest are paying attention to internet-only banks. This is because the special promotional savings and deposit products that used to flood the banking sector at the end of each year have disappeared. The fact that demand deposit accounts offer an annual interest rate of 2% is analyzed to have attracted consumers' interest.

According to the financial sector on the 24th, Toss Bank offers an annual interest rate of 2% on demand deposit accounts without any conditions, not just on fixed deposits. Even if money is deposited for only one day, interest is provided for the number of days deposited, and benefits can be enjoyed even if the account is closed midway.

Considering that the interest rate on demand deposit accounts at major commercial banks is usually around 0.1% per annum, this is simply "unprecedented." Toss Bank, which launched on the 5th of last month, is reported to have recently surpassed 10 trillion won in deposit balances thanks to this product.

Other internet banks such as K Bank and Kakao Bank also offer deposit products with higher interest rates compared to commercial banks. K Bank released a special promotion commemorating the Korean Series championship of the group baseball team "KT Wiz." The "Code K Fixed Deposit" 1-year maturity product offers an interest rate of 2.1% per annum. It runs without a specific deadline until the limit of 202.1 billion won is exhausted. This product also provides a "rate guarantee service" that automatically applies an increased interest rate if rates rise within two weeks after subscription.

Kakao Bank's 26-week installment savings also offers a 2% annual interest rate. The basic interest rate is 1.5% per annum, and if the saver successfully makes regular payments for 26 weeks, an additional 0.5 percentage points are granted. Kakao Bank's fixed deposit interest rate is also 1.5% per annum, which is high compared to commercial banks.

Meanwhile, unlike internet banks, it is difficult to find high-interest deposit products at major commercial banks. There is no particular reason to increase deposits by incurring costs. Due to household loan volume regulations blocking loans, banks do not need to secure loan funds through deposits, and the easing of regulations such as the loan-to-deposit ratio is also interpreted as a factor. The rapid increase in deposits during the interest rate hike period is another cause. The deposit balances of the five major commercial banks have increased by more than 20 trillion won in the past month.

A financial sector official said, "Given the current situation banks face, there is no reason to offer high-interest deposit products. However, internet banks like Toss Bank appear to be trying to attract customers through high-interest products as they are still in the early stages of growth."

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