Banks Launch High-Interest Savings Accounts to Attract Funds Diverted to Real Estate and Stocks
[Asia Economy Reporter Kiho Sung] Commercial banks and internet banks are continuously launching high-interest savings products. This is interpreted as a strategy to attract financial consumers by offering exceptional interest rate benefits in the zero-interest rate era.
According to the financial sector on the 19th, Woori Bank announced that it will start pre-reservation sales on its One Banking platform from today and officially launch the ‘Woori Magic Savings by Lotte Card’ on the 28th, offering a high interest rate of up to 7.0% per annum. The sales limit is 100,000 accounts, with a subscription period of one year and a maximum monthly deposit limit of 500,000 KRW. The interest rate consists of a base rate of 1.5% per annum, a preferential rate of up to 0.5 percentage points per annum, and a special preferential rate of up to 5.0 percentage points per annum, totaling a maximum of 7.0% per annum.
The preferential rate of 0.5 percentage points per annum is provided when subscribing to Woori Open Banking and agreeing to product and service marketing. The special preferential rate is given based on Lotte Card usage performance, with existing customers receiving 2.0 percentage points per annum and new customers receiving 5.0 percentage points per annum.
Kakao Bank also announced on the same day that it separated the Kakao Bank 26-week savings, which has accumulated about 8 million accounts, from the free savings product and enhanced the interest rate benefits.
Kakao Bank strengthened the preferential interest rate benefits based on the automatic transfer period from the previous 0.20 percentage points per annum to a maximum of 0.50 percentage points per annum. If the subscriber successfully deposits savings through automatic transfers for 7 weeks after account opening, they receive a base interest rate of 1.10% per annum plus a preferential rate of 0.20 percentage points per annum, and if continued for 26 weeks, an additional 0.30 percentage points per annum is provided. The maximum interest rate for the 26-week savings is 1.60% per annum. The new preferential interest rate benefits apply to new subscriptions from today.
The 26-week savings product has established itself as a representative deposit product of Kakao Bank since its launch in June 2018. As of the end of last month, the cumulative number of accounts opened exceeded 7.9 million.
KB Kookmin Bank also partnered with E-Mart to launch the ‘E-Mart Kookmin Savings,’ which offers up to 10% annual interest if subscribers deposit 100,000 KRW monthly for one year and spend more than 1.2 million KRW at E-Mart during that period.
The base interest rate is 0.7% per annum, but new KB Kookmin Bank account holders receive an additional 1.0 percentage point per annum, and registering Open Banking through the KB Star Banking application adds another 0.3 percentage points per annum. During the savings period, if the total payment registered with Shinsegae Points under the account holder’s name exceeds 1.2 million KRW annually at E-Mart offline stores, an 8% preferential interest rate is applied. The savings subscription benefits are available only to up to 100,000 people who win the pre-application event held from today until the 29th.
IBK Industrial Bank of Korea also signed a business agreement with the sports content platform SPOTV last month and launched the ‘IBK SPOTV Now Savings’ offering up to 5% interest. The base interest rate is 0.5% per annum. If subscribers pay for the online video service ‘SPOTV Now’ three or more times using the IBK BC Card, they receive an additional 2.5 percentage points per annum, and if they set up automatic transfers from an IBK deposit account to this product three or more times, they get an additional 1.0 percentage point per annum. An event interest rate of 1.0 percentage point per annum is also given to subscribers this year.
The product is for individuals with a maximum subscription period of 6 months and a maximum monthly deposit of 200,000 KRW. It is sold on a first-come, first-served basis to 10,000 people.
Banks Launching High-Interest Savings Amid Low Interest Rates and Open Banking
Woori Bank previously introduced a high-interest savings product with an annual rate of 6.0% last month. The bank launched the ‘Woori Magic Savings by Woori Card,’ which offers up to 6.0% annual interest when transaction performance and Woori Card usage conditions are met. This product is a follow-up to the ‘Woori Magic6 Savings,’ which sold out within two months of its launch last year.
The subscription period for this savings product is one year, with a maximum monthly deposit limit of 500,000 KRW. The interest rate consists of a base rate of 1.0% per annum, a preferential rate of up to 1.0 percentage point per annum, and a special preferential rate of up to 4.0 percentage points per annum, totaling a maximum of 6.0% per annum.
The preferential rate of up to 1.0 percentage point per annum is provided when subscribing to the Woori Open Banking service, agreeing to Woori Bank product and service marketing, and transferring salary (or pension) to a Woori Bank account. The special preferential rate of up to 4.0 percentage points per annum is given when meeting Woori Card usage and automatic transfer conditions.
The continuous launch of high-interest savings products by banks is interpreted as an effort to bring funds back to banks that had flowed into stocks, Bitcoin, and real estate. The implementation of Open Banking services has also intensified competition among banks to attract customers, which is seen as encouraging the release of high-interest savings products.
A bank official said, "By attracting customers with high-interest savings products and encouraging automatic transfers, banks can at least gain fee income, achieving a twofold benefit."
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