Even Parking Accounts Rival Savings... Savings Banks Offer Up to 3% Interest Rates

K Bank Offers 2.1% Interest Rate with 0.8%p Increase... Welcome Savings Bank Up to 3.0%

[Asia Economy Reporter Yoo Je-hoon] Office worker Lee Yeon-ju (32, female, pseudonym) recently decided to put a lump sum of 30 million KRW, received from a matured savings installment, into a demand deposit account (commonly called a parking account) at a certain mutual savings bank. She felt hesitant to hastily subscribe to a fixed deposit during the interest rate hike period, but above all, she judged that it was not a big loss since with a little more effort, she could aim for an annual interest rate in the 3% range even with a parking account.

As the base interest rate continues to rise, the interest rates on parking accounts, which pay interest even if funds are deposited for just one day, are also increasing. In particular, some savings banks have actively entered the fund attraction battle by raising parking account interest rates to the 3% range, comparable to fixed deposits at commercial banks.

According to the financial sector on the 15th, K Bank will raise the interest rate on its demand deposit account ‘Plus Box’ from the existing 1.3% per annum to 2.1% per annum, an increase of 0.8 percentage points (p), starting today. The highest interest rate applies to amounts up to 300 million KRW, and interest is paid on the fourth Saturday of every month.

This interest rate from K Bank surpasses the level of the parking account interest rate that sparked the ‘parking account’ boom, the Toss Bank account. Toss Bank previously paid 2.0% interest per annum on amounts up to 100 million KRW, attracting about 3 million new subscribers and achieving significant results.

The savings bank sector is also joining the parking account interest rate war. SBI Savings Bank raised the interest rate on its digital channel Cider Bank’s deposit account from 1.6% to 2.0% (for amounts up to 100 million KRW) starting from the 1st. Hana Savings Bank also raised the interest rate on its Hi Hana ordinary deposit to 2.5% (for amounts up to 30 million KRW).

Recently, some banks have begun offering interest rates at the level of commercial banks’ fixed deposits, around 3%. Welcome Savings Bank recently raised the interest rate on its Welcome Office Worker Love ordinary deposit from a maximum of 2% to 3% (for amounts up to 50 million KRW). The preferential conditions are relatively simple: ▲ salary transfer performance of 1 million KRW or more ▲ at least one automatic transfer (CMS) or Giro automatic payment ▲ agreement to marketing and membership. OK Savings Bank also raised the interest rate on its OK Eut account to 3.2% per annum (for amounts up to 10 million KRW). Simply registering the OK Eut account with open banking services provided by other financial institutions fulfills all preferential interest rate conditions.

The popularity of demand deposit accounts is due to the recent consecutive interest rate hikes, which have led to a wait-and-see attitude toward various financial investment products as well as deposits and savings. A representative from a mutual financial institution working at a frontline branch said, "As interest rates have been rising almost every month and quarter, even high-net-worth individuals sometimes deposit funds into parking accounts as a way to pause," adding, "Since the base interest rate hike trend is expected to continue until the end of the year, market interest rates will keep rising, and this trend is expected to persist."

From the perspective of each financial company, parking accounts serve not only as a customer acquisition tool but also as an opportunity to expand low-cost deposits. For financial institutions, low-cost deposits play a vital role in raising funds at relatively low interest rates. A financial sector official said, "As we enter a period of rising interest rates, low-cost deposits are being withdrawn, so it seems that each financial company is adjusting this by raising parking account interest rates."

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