A 1%P Increase at Once... Parking Account Interest Rates Rivaling Deposits

Interest Rate Competition Intensifies... Savings Banks at 3% Range - Internet-Only Banks Also in 2% Range

[Asia Economy Reporter Yoo Je-hoon] Office worker Park I-rang (33, female) recently transferred a lump sum of about 30 million won, which she had deposited in an internet-only bank parking account, to a parking account at a certain mutual savings bank. She is using parking accounts because news suggests that interest rates will continue to rise at least until the end of the year, and the interest rate gap between parking accounts has widened to around 1 percentage point (P). Park said, "It's not money I need to use immediately, but I chose a parking account because I was reluctant to lock it in a fixed deposit," adding, "I will switch if a better product comes out."

As idle funds in the market are rapidly flowing into savings and time deposits, competition over interest rates for demand deposit accounts (commonly called 'parking accounts') continues. Not only internet-only banks but also mutual savings banks and commercial banks have joined the competition, with some financial companies responding by raising parking account interest rates by as much as 1%P at once.

According to the financial sector on the 20th, SBI Savings Bank notified customers that from the 21st, the interest rate on the 'Cider Bank Demand Deposit Account' will be raised by 1%P from the existing annual 2.2% to 3.2%. If the daily account balance is 100 million won or less, an interest rate of 3.2% per annum applies, while balances exceeding 100 million won receive an interest rate of 0.2% per annum.

Recently, parking account interest rates at competing savings banks such as OK Savings Bank (3.3%, up to 10 million won), Pepper Savings Bank (3.2% per annum, up to 50 million won), and Welcome Savings Bank (3.0% per annum, up to 50 million won) have risen to the low 3% range. This is interpreted as a measure to respond to the soaring interest rates on time deposits and savings at first-tier financial institutions. According to the Bank of Korea, as of July, the weighted average interest rate for one-year time deposits at domestic deposit banks reached 3.33%.

The parking account interest rate competition is not limited to the secondary financial sector. Internet banks are also steadily competing on interest rates. Since Toss Bank launched the 'Toss Bank Account' with a 2.0% annual interest rate last year, K Bank (2.3%) and Kakao Bank (2.2%) have also successively raised parking account interest rates. Some commercial banks have done the same. KDB Industrial Bank introduced a parking account that pays 2.25% interest annually without separate amount or preferential conditions, and SC First Bank also raised the base and preferential interest rates of its parking account, 'First EZ Account,' offering new customers up to 2.5% interest for six months.

A source from the savings bank sector said, "As commercial banks' time deposit interest rates rise, they are aggressively implementing interest rate policies to prevent the outflow of low-cost core deposits and to attract new funds," adding, "Although there will be an upper limit due to total loan volume regulations, with the base rate hike expected until the end of the year and an increase in financial consumers managing funds on an ultra-short-term basis, parking account interest rates are expected to continue rising for the time being."

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