"Up to 12% Annual Interest: Smart Savings Accounts to Grow Your Child’s Funds [Practical Finance]"

The competition among banks to secure future customers is intensifying. Not only the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), but also internet banks and mutual finance institutions are offering savings products designed to help customers accumulate substantial funds. A variety of products are being launched to attract everyone from newborns to teenagers, with additional entertainment features to engage young customers.

As of August 13, according to the banking sector, a range of savings products for minors are being introduced by banks. Interest rates vary from a minimum of 2% to a maximum of 12%, and monthly deposit limits range from 200,000 won to 3 million won. The five major banks are providing child-focused financial services on their apps, such as "Create a Child Account." A representative product aimed at newborns is Hana Bank’s "Hana Child Growth Savings." This product offers preferential interest rates to recipients of child-rearing allowances, pregnant women, and families with multiple children. The maturity period is one year, with a monthly deposit limit of up to 300,000 won, and sales are limited to 50,000 accounts until December 31 of this year. The base interest rate is 2%. Conditions for preferential rates include receiving a child-rearing allowance or being pregnant (2%), holding a housing subscription savings account with Hana Bank (0.6%), pledging to protect the child’s future (1%), subscribing to the Hana Hap Service (0.3%), and agreeing to marketing communications (0.1%). Additionally, families with two children receive an extra 1%, and those with three or more children receive an extra 2%. KB Kookmin Bank launched a similar product, "KB Child Love Savings," in August last year, and as of August 1, all 50,000 accounts have been sold.

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In the mutual finance sector, Saemaeul Geumgo’s "Baby Snake Savings" offers exceptionally high interest rates. This product is a follow-up to last year’s "Yongyong Savings," which was created to support efforts to overcome low birth rates. It has a one-year maturity and a monthly deposit limit of 200,000 won, with a maximum annual interest rate of 12% for up to 50,000 subscribers. The base rate is 10% per year, and preferential rates are offered to families with multiple children: 11% per year for the second child and 12% per year for the third child or more. For babies born in areas with declining populations, an annual rate of 12% applies regardless of the number of children.

For those who want to easily qualify for preferential rates, Toss Bank’s "Child Savings" is an option. The monthly deposit limit is 200,000 won, and interest rates range from 2.5% to 5%. If a guardian sets up an automatic transfer from their Toss Bank account to the savings account, a preferential rate of 2.5% can be obtained. Upon maturity, the account can be automatically renewed, and up to two partial withdrawals are allowed before maturity.

Although interest rates are lower, products with higher monthly deposit limits are often targeted at teenagers. KB Kookmin Bank’s "KB Young Youth Savings" and Shinhan Bank’s "Shinhan MY Junior Savings" offer maximum interest rates of 3.4%, but their monthly deposit limits are 3 million won and 1 million won, respectively, which are higher than those for newborn-oriented savings products. For the KB Kookmin Bank product, preferential rates are applied as follows: 0.2% for families with three or more registered family members at the bank, 0.1% for making eight or more automatic transfers to the savings account, 0.1% for receiving the child allowance three or more times, up to 0.4% for newly opening or holding a housing subscription savings account, and 0.5% for children who are exactly 0, 7, 13, 16, or 19 years old. Shinhan Bank also offers up to 1% preferential rates based on factors such as holding a housing subscription savings account, setting up automatic transfers, receiving the child allowance, and debit card usage.

Woori Bank’s "Woori Child Happiness Savings 2" and Nonghyup Bank’s "NH All-One TEENZ Savings" both have a monthly deposit limit of 500,000 won, with maximum interest rates of 3.65% and 3.8%, respectively. At Woori Bank, customers can receive a 1% preferential rate by submitting a certificate after pre-registering their fingerprints with the police. Nonghyup Bank offers a 0.2% preferential rate for opening a new account in the child’s birth month and a 0.5% preferential rate for opening a TEENZ account.

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There are also products with no interest rates, designed to allow teenagers to save and personalize their savings experience. On July 22, KakaoBank launched the "mini My Way Savings" service. This service helps teenagers set their own savings goals and manage their allowances independently, adding customization features to suit their purposes and preferences. Up to 10 savings jars can be created, each with a custom name for different spending plans. Each savings screen can be customized with preferred photos, backgrounds, and colors. A "Feed the Piggy Bank" feature, using a piggy bank character, was also introduced: tapping the character automatically saves 10 won, and the character’s reactions change as the accumulated amount increases. Up to 500,000 won can be saved in total.

The five major banks are also busy developing dedicated platforms for teenagers. At the end of last year, KB Kookmin Bank introduced "KB Star Teens." Membership can be completed with mobile phone verification, without visiting a branch, and teenagers can create a dedicated prepaid wallet called "Pocket." Through this Pocket, money can be sent or received without fees. ATM deposits and withdrawals, as well as recharge transactions at CU convenience stores, are also possible. A Pocket-only card is issued, offering a 5% discount at convenience stores, Olive Young, and Daiso. Educational content, such as daily Korean history quizzes, is also included. KB Kookmin Bank plans to expand the eligible age for joining from the current 14 years and older to 6 years and older within this year. Nonghyup Bank also launched the "TEENZ" platform within its NH All-One Bank app at the end of last year. The platform offers discount coupons for restaurants popular among teenagers, allowance management features, and financial education resources.

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