The black hole deposit market… “Don’t be fooled by the high interest rates.”[채선희의 금융꼬투리] By Hankyung

© Reuters. The black hole deposit market… “Don’t be fooled by the high interest rates.”[채선희의 금융꼬투리]

Customers are queuing up to sign up for an interest rate hike on deposits. / Photo = Hankyung DB

“It’s not limited edition or Starbucks goods (planned products)… The day is coming when I’m going to run open to pay a deposit” (34-year-old office worker Lee Jeong*)

“It’s such a difficult time to even save money… Sometimes on my way to work, it seems like there are 10 people in line in front of Saemaul Geumgo.

With the advent of the era of 6% annual deposit interest rate and 13% annual installment interest rate, the daily life of investment technology is changing. As non-face-to-face financial transactions become commonplace, the situation of getting a numbered ticket and standing in line in front of a financial company you don’t normally visit is developing. Even if you open the window to register for a deposit product unexpectedly at dawn, the result is ‘sold out’.

“I’m not registered yet…”

No need to worry if you haven’t signed up for a high interest deposit product yet. The reason for this is that deposit interest rates are expected to rise further for the time being amid the trend to raise base rate. In addition, as the corporate bond market freezes, the competition of financial companies for deposit rates to secure funds is expected to intensify.

According to the Bank of Korea on the 12th, over the past month, over 56 trillion won has been poured into bank time deposits. This is the highest ever since related statistics were compiled. This year, a lump sum of money is poured into term deposits. From January to October, an inflow of 187.5 trillion won in fixed deposits, an increase of almost six times compared to the same period last year (33 trillion won).

As the standard interest rate of 3% per annum opened and as the bank time deposit interest rate increased to the 5% level, investments in risky assets rushed to safe assets like a tide. Since last month, time deposits of more than 5% per annum have appeared in commercial banks one after another. Currently, the highest interest rate is 5.34% per annum with IBK Industrial Bank’s ‘law of success deposit’. Jeonbuk Bank’s ‘JB 1·2·3 Term Deposit’ has a maximum annual interest rate of 5.3%, and Woori Merchant Term Deposit has a maximum annual interest rate of 5.2%.

In the savings bank, the second financial sector, a term deposit yield of 6% also appeared. Including ‘OK Savings Bank’s ‘OK E-Term Deposit’ and ‘E-Safe Term Deposit (Flying Rate)’, KB Savings Bank ‘KB e-plus Term Deposit’, Daishin Savings Bank ‘Smart Term Deposit’, Cham Savings Bank’s ‘time deposit that is not face to face’ offers interest rates of up to 6% per annum. Customers flock to a savings bank in Gangnam even before it opens. / Photo = Hankyung DB The interest rate on installment savings increased up to 13% per annum. Kwangju Bank’s ‘Lucky Installment Savings’ offers a base interest rate of 3.7% and a maximum annual preferential interest rate of 10%. Hana Bank’s ’11 Best Installment Savings’ offers up to 11%, and Woori Merchant Bank’s ‘The Dream Regular Deposit 3’ and ‘Hi Regular Deposit’ offer up to 10% p.a. Earlier this month, Jeju Dongbu Credit Union sold installment savings products with an annual interest rate of 10% only in branch windows, and some regions of Saemaul Geumgo also sell special products with an annual savings rate of 10%.

Speed ​​of registration is important as high interest products have a certain limit and can close quickly. In this case, it is convenient to use the Consumer Portal of the Federation of Banks, the Consumer Portal of the Federation of Korea Savings Banks, and ‘Financial Products at a Glance’ from the Financial Supervision Service’s integrated comparison disclosure of financial products, where you can check the position of deposit interest rates on once.

It is said that as early as next April, a service platform that can compare the interest rate conditions of deposit products of financial institutions will be released immediately. According to the Financial Services Commission, the newly launched service not only offers the highest interest rate, but also enables a customized product recommendation to consider whether users can receive favorable rates by linking My Data. It compares card performance requirements, often used for preferential interest rates for deposit products, with your normal financial life data to calculate expected interest rates and receive recommendations.

The background of the recent increase in interest rates on deposit products is not only a sharp increase in the base interest rate, but also the financial difficulties of financial companies. In particular, as funds are concentrated in banks, there is a crisis in the second financial sector. In addition, as the financial crisis continues, the insolvency crisis has increased, focusing on the second financial sector, which has a high proportion of real estate project financing (PF) loans, and the competition to secure liquidity has become more fierce than ever.

It is not only about paying a lot of interest at a high interest rate, but also considering the liquidity position of financial companies. In fact, the ‘savings bank crisis’ happened in 2011 and shook the Republic of Korea. Customers of bankrupt savings banks received their money back within the scope of depositor protection of 50 million won, but in some cases it took several years to get the entire amount back.

Ha Jun-sam, head of Shinhan Bank’s Sanbon Branch WM Premier, said, “It is important to diversify transactions within the range of 50 million won in financial companies with relatively good credit.”

The Ha Manager said, “After the first half of next year, the rising trend in interest rates is very likely to end. In the case of term deposits, manage deposits in 3-month or 6-month increments, and when the sign that interest rates stop rising, and managing them for more than a year is also an option.” “He advised.

Chae Seon-hee, Hankyung.com reporter csun00@hankyung.com

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