Toss, K Bank, and Others Offer 2% Interest Rates on Deposit Products
[Asia Economy Reporter Kim Jin-ho] Self-employed Park Jung-wook (35, pseudonym) recently canceled all his bank savings and deposit products. Although he saves a considerable amount every month, he felt the interest rates were absurdly low. After hearing that the base interest rate would rise twice more by early next year, Park decided to keep all his money in a demand deposit account for the time being. Following a friend's recommendation, he put all his money into a Toss Bank demand deposit account. With an interest rate of 2% per annum, double that of existing savings and deposit products, he was highly satisfied.
Amid the interest rate hike period, while loan interest rates are soaring daily, deposit interest rates have barely moved, leading to growing consumer dissatisfaction. Especially, the special promotional savings and deposit products that used to flood banks at the end of each year have disappeared this year. As a result, consumers seeking to earn even a little more interest are turning to internet-only banks. Demand deposit accounts offer interest rates nearly 20 times higher than those of traditional banks.
According to the financial sector on the 28th, Toss Bank offers an unconditional 2% annual interest rate on demand deposit accounts, not just fixed deposits. Even if money is deposited for only one day, interest is paid for the exact number of days deposited, and benefits can be enjoyed even if the account is closed early.
Considering that major commercial banks typically offer an interest rate of 0.1% per annum on demand deposit accounts, this is truly 'unprecedented.' Toss Bank, launched on the 5th of last month, reportedly surpassed 10 trillion KRW in deposit balances recently, thanks to this product.
Other internet banks like K Bank and Kakao Bank also offer deposit products with higher interest rates compared to commercial banks. K Bank launched a special promotion commemorating the Korean Series championship of its group baseball team, 'KT Wiz.' The 'Code K Fixed Deposit' 1-year product offers an interest rate of 2.1% per annum. It runs without a fixed deadline until the limit of 202.1 billion KRW is exhausted. This product also provides a 'rate guarantee service' that automatically applies an increased interest rate if rates rise within two weeks after subscription.
Kakao Bank's 26-week installment savings also offer a 2% annual interest rate. The basic rate is 1.5% per annum, and if the saver successfully makes consistent payments for 26 weeks, an additional 0.5 percentage points are granted. Kakao Bank's fixed deposit interest rate is also 1.5% per annum, higher than that of commercial banks.
Meanwhile, according to the Financial Supervisory Service, among 21 special promotional savings and deposit products (launched since 2020) from the five major commercial banks and regional banks that matured between January last year and September this year, the actual interest paid to customers averaged only 78% of the highest interest rate level announced at subscription.
This is because banks set complicated and difficult conditions for preferential interest rate payments, such as registering for open banking, achieving usage performance of affiliated products, or pension transfer performance, to apply the highest interest rate (base rate + preferential rate).
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
