[Heated Savings and Time Deposit Competition] Tempted by Even 0.1%P... Savings and Time Deposits Switching Again and Again

Commercial Banks → Internet-Only Banks → Switching Back to Commercial Banks
"If the subscription period is short, switching is advantageous
Must consider early termination interest, etc."

#Office worker Park Yerim (33, pseudonym) moved 5 million won, which had been tied up in a Shinhan Bank fixed deposit product with an interest rate in the 1% range at the end of last year, to a Kakao Bank fixed deposit offering an interest rate in the 2% range in May this year. However, last month, she switched again to an Industrial Bank of Korea fixed deposit with an interest rate in the 3% range. Park said, "Simply calculating before tax, the interest for a one-year term at Kakao Bank is 100,000 won, but if I switch, it becomes 180,000 won, which is 1.8 times more," adding, "Since the Kakao Bank deposit period is short at two months and the money is going to be tied up anyway, I think earning even a few thousand won more is beneficial."

Following the Bank of Korea's base interest rate hike, competition for deposits and savings accounts among banks has intensified. As of the 4th, according to the Bankers Association's disclosure, the deposit interest rates of major commercial banks reached the 3% range. As commercial banks raised deposit and savings interest rates by nearly 1 percentage point last month, internet-only banks, which had attracted users with competitive interest rates, were overtaken. Because of this, there is also a phenomenon of 'switching' back from internet-only banks to commercial banks. National policy banks such as KDB Industrial Bank, which had been somewhat distant from consumers, have recently seen increased inquiries as their deposit products' conditions improved due to interest rate hikes.

In financial communities, interest in calculating the benefits of switching deposits and savings accounts, including early withdrawal interest, has also increased. A commercial bank official said, "Recently, there have been many inquiries about switching deposits and savings accounts even at branch offices," adding, "Switching is advantageous when the subscription period is short, but for deposits and savings accounts with little time left until maturity, it is recommended to keep them as is and join other products after maturity since it is an interest rate hike period anyway."

On this day, according to the Bankers Association disclosure, the highest interest rates for one-year fixed deposit products were offered by Industrial Bank of Korea and Woori Bank. Industrial Bank of Korea's ‘KDB Hi Fixed Deposit’ and Woori Bank's ‘Woori First Transaction Preferential Fixed Deposit’ both offered up to 3.6%. As commercial banks aggressively raised deposit interest rates, many products in the 3% range appeared. Shinhan Bank's ‘Beautiful Courage Fixed Deposit’ offered up to 3.4%, Hana Bank's ‘Hana One Fixed Deposit’ was 3.3%, and KB Kookmin Bank's ‘KB Star Fixed Deposit’ was 3.13%. Internet-only banks, which had previously used high interest rates as a weapon, showed signs of falling behind as commercial banks raised their rates. K Bank's ‘Code K Fixed Deposit’ offered up to 3%, and Kakao Bank's fixed deposit was around 2.5%.

For one-year installment savings products (free installment, 12 months), IBK Industrial Bank's ‘IBK Some Account’ offered the highest interest rate at 5.05%. Among major commercial banks, Shinhan Bank's ‘Hello Nice to Meet You Savings’ offered up to 4.6%, and KB Kookmin Bank's ‘KB My Fit Savings’ offered up to 4.4%. K Bank's main transaction preferential free installment savings offered 3.2%, and Kakao Bank's free installment savings offered up to 2.9% interest.

As commercial banks' interest rates rise, the phenomenon of large sums of money flowing into banks continues. The balance of fixed deposits at the five major commercial banks surpassed 700 trillion won for the first time. According to the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup), the fixed deposit balance at the end of last month was 712.4491 trillion won, an increase of 27.3532 trillion won compared to the previous month. The balance of fixed savings was 38.1167 trillion won, up 652.4 billion won from a month earlier.

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