Parking Account Competition Rises... 3% Interest Rate Approaching Even at Internet Banks

K-Bank Offers Up to 2.7% Interest Rate Among Commercial Banks
Kakao Bank Also Raises Rates... Tobank Lifts Amount Limit Again
Savings Banks Propose Rates in the 4% Range

[Asia Economy Reporter Minwoo Lee] The competition for interest rates on demand deposit parking accounts, which pay interest without any special deposit period conditions, is heating up again. Internet-only banks are aiming for rates above 3%, and some savings banks even offer up to 4%.

According to the industry on the 29th, K Bank raised the interest rate on its parking account product 'Plus Box' by 0.2 percentage points to an annual rate of 2.7% starting from the 27th. An interest rate of 2.7% per annum is applied even if deposited for just one day within a maximum limit of 300 million KRW, and interest is paid on the fourth Saturday of every month. Depositing 10 million KRW yields a monthly after-tax interest of 19,000 KRW.

Following Kakao Bank's recent increase in parking account interest rates, a fierce competition has emerged. Earlier, Kakao Bank raised the interest rate of its parking account 'Safe Box' by 0.4 percentage points to 2.6% per annum on the 19th. The maximum limit is 100 million KRW.

Toss Bank, which sparked the popularity of parking accounts but had fallen somewhat behind in the interest rate competition, is also accelerating. On the 6th, it raised the interest rate on its parking account equivalent, the 'Toss Bank Account,' from 2.0% to 2.3% per annum. On the 20th, it also removed the interest payment limit of 100 million KRW. Previously, Toss Bank led the parking account craze by offering 2% interest per annum without any amount limit when it launched in October last year, but applied a limit after two months. This is interpreted as a cost burden caused by funding difficulties after financial authorities capped Toss Bank's household loan total at 500 billion KRW.

Savings banks have gone a step further by offering parking accounts with interest rates of up to 4%. Acuon Savings Bank raised the interest rate on its existing parking account product to 4.0% per annum on the 25th, the highest level among parking accounts across the first and second financial sectors. Additionally, Welcome Savings Bank and Hana Savings Bank also offer parking accounts with interest rates of 3.8% per annum.

The competition for parking accounts is expected to continue for the time being. As we enter a high-interest rate era, low-cost deposits like parking accounts are gradually moving to high-cost deposits such as fixed-term savings and time deposits. If low-cost deposits leave, it increases burdens not only on loans but also on the management of various products. To reduce funding costs, banks must attract customers by emphasizing the unique strengths of parking accounts as well as fixed-term savings and time deposits.

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