As regulations on the regular installment savings period are eased from April, banks are offering so-called one-month installment savings that can be placed with a maturity of at least one month. However, since there isn’t much interest that can actually be received, users don’t see it.
According to the financial sector on the 8th, the highest interest rate among the recently released one-month installment savings products is KB Kookmin Bank’s Special Installment Savings. The maximum interest rate of 6% is applied to this product when the prime interest rate is combined. However, as the minimum monthly deposit is only 1,000 won and the maximum is 300,000 won, even if the highest interest rate is applied, interest of around 1,300 won after tax will be be accepted on maturity.
IBK Industrial Bank of Korea also renewed the IBK D-Day Installment Savings, shortening the minimum subscription period from six months to one month. Customers can freely set the expiry date according to the purpose of subscribing to installment savings, such as a 50-day holiday, a 100-day celebration for my child, or a 100-day anniversary for a couple. Regarding the interest rate, a maximum interest rate of 5.35% is provided when the basic interest rate is 3.45% per annum and favorable conditions are met, but the maximum is up to 200,000 earned per month.
Hana Bank recently introduced a timing installment savings account with a very short maturity of one month on the 7th. This product is a product that deposits the amount set by the customer (10~5,000 won) by touching the deposit button dedicated to timing installment savings as if playing a game, and it provides a favorable interest rate according to the number of touches. The maximum monthly payment limit is 650,000 won, but the maximum interest rate is 3.95% per annum.
In addition, internet-only bank K-Bank added 1 month and 3 months to the ‘Code K Free Savings’ subscription period. Shinhan Bank, Woori Bank, Kakao Bank, and Toss Bank are also considering products with a similar structure.
Recently, a related regulatory review is behind the infusion of very short-term installment savings products with a maturity of one month. Originally, the maturity of installment savings was set at a minimum of six months in accordance with the Bank of Korea’s regulations on loans and deposits of financial institutions. However, as the Monetary Policy Committee voted to amend this regulation in November last year, it became possible to deal with very short-term installment savings from this month. This was the first review in 27 years since 1995.
Banks are trying to attract customers who want to attract short-term money by launching very short-term installment savings products. As deposit interest rates have recently fallen and uncertain economic conditions continue, consumer preference for long-term deposits is declining. The deposit interest rates of the five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, exceeded the 5% range in November last year, but are in the mid-3% range this month .
In the banking sector, market reserves such as demand deposits are increasing. As of last month, the balance of time deposits in the five major banks was 805.3384 trillion won, down 10.3622 trillion won from a month ago. Regular deposits fell by 231.2 billion won over the same period. On the other hand, demand deposits, represented by salary accounts, increased by 8.5435 trillion won to 598.2682 trillion won. It appears that the money missing from the term deposit has been moved to the demand deposit.
An official from the financial sector said, “It appears to be a strategy to target younger generation customers who usually have a short cycle of consumption and savings patterns.” It could be more,” he said.
