Rubber Band Lending Rates, Baiting Preferential Rates... 'Angry' Financial Consumers

Toss Bank Changes '2% Unconditional Deposit' Structure
From Next Year, Amounts Over 100 Million KRW Will Earn 0.1% Interest
Some Offer High Interest Rates with Complex Conditions
Financial Authorities Warn "Guidance Will Be Given If Misunderstandings and Complaints Increase"

Notice about savings and deposits posted on the exterior wall of a bank in downtown Seoul. Photo by Mun Ho-nam munonam@

Financial consumers continue to express dissatisfaction with banks' deceptive marketing tactics, such as attracting deposits with high interest rates and then lowering them again or imposing multiple conditions during the subscription process. There are voices saying that it is difficult to fully enjoy the benefits of savings and deposit interest rates in a situation where loan interest rates are uniformly high. Critics argue that if the rubber-band and bait-and-switch interest rate practices are repeated, consumer complaints and damages will only increase.

According to the financial sector on the 14th, recently, posts inquiring about switching deposit products from Toss Bank have increased significantly on an internet community. This appears to be due to more people trying to withdraw their deposited money as Toss Bank’s deposit interest rates will be applied differentially by tier starting from the 5th of next month.

Earlier this month, Toss Bank announced that if the deposit balance exceeds 100 million KRW, the interest rate on the excess amount will be drastically lowered to 0.1%. For example, if a total of 200 million KRW is deposited in a Toss account, 2% interest applies to the first 100 million KRW, and 0.1% applies to the remaining 100 million KRW. Although the bank claims this is unavoidable due to a negative margin situation, the phrase "2% interest on deposits with no conditions" at launch has become meaningless in just two months.

Immediate complaints have come from Toss Bank users. Kim Chi-hyun (43, pseudonym), who posted on a popular financial community with about one million users, said, "I moved all my money to Toss, but it’s absurd that they are 'dramatically' lowering the deposit interest rate shortly after launching," and pointed out, "This is the first time I’ve seen a bank change the interest rate structure of a parking account so quickly."

Seong Ji-hyun (38, pseudonym) also said, "I was happy just a few days ago when Toss Bank ambitiously applied a 2% interest rate to a demand deposit product," and added, "But shortly after, they announced a change in the applied interest rate, so I’m thinking of moving my money again to a savings bank parking account with a similar interest rate but a higher limit."

Attracted by High Interest Rates... Complex Conditions Collapse

Another source of consumer complaints is that banks announce high interest rates but impose complicated or difficult-to-meet conditions. These include switching salary transfer accounts or opening a new credit card with a partner card company and spending a certain amount monthly. Some have excessively low monthly limits or short subscription periods.

The financial authorities also urged financial consumers to exercise careful attention, noting that complaints related to preferential interest rate financial products sold by financial companies continue. According to the Financial Supervisory Service, from January last year to September this year, there were a total of 58 special savings and deposit products with 2.25 million accounts (10.4 trillion KRW). The interest rates paid to customers upon maturity were 78% of the highest interest rate, and two products paid less than half.

An official from the Financial Supervisory Service emphasized, "We will strengthen monitoring and analysis of financial products sold in the market," and added, "For products that raise concerns about consumer misunderstanding and generate many complaints, we plan to continuously improve guidance materials and ensure thorough explanation obligations."

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