[Practical Finance] Earn Interest Equal to Your Salary by Depositing 100 Million? How to Live in the 5% Savings Interest Era

[Asia Economy Reporter Buaeri] #Office worker Kim Yeji (36) is currently comparing deposit products at major commercial banks to re-lock about 150 million won she had prepared for her wedding fund into savings. She had been trying to earn investment returns by putting a certain amount into deposits and the remaining spare money into stocks or funds, but her thoughts changed after seeing recent interest rate hikes. Kim said, "If I sign up for a deposit product, there is no risk of loss, and these days, it seems to yield much better returns than touching most stocks." With fixed deposit products offering interest rates in the high 4% range now available at major commercial banks, the era of 5% deposit interest is rapidly approaching. For example, if you deposit 100 million won, you can receive 4 to 5 million won in interest per year, leading to remarks like "annual bank interest matches a month's salary."

Deposit Rates at the Top 5 Banks Also Near 5%

Major commercial banks raised their deposit interest rates starting from the 14th in response to the Bank of Korea's base rate hike. As banks continue to raise deposit rates one after another, deposit products with top interest rates reaching the high 4% range are emerging. Among commercial banks, Woori Bank offers relatively favorable rates. Woori Bank raised its deposit rates by up to 1 percentage point, making the interest rate for the 'Woori First Transaction Preferential Fixed Deposit' up to 4.8% (based on 12 months). However, this product is only available to customers who are transacting with Woori Bank for the first time. The 'WON Plus Deposit' offers an interest rate of 4.65%.

Shinhan Bank also raised interest rates on 39 deposit and installment savings products by up to 0.8 percentage points. Shinhan Bank's representative deposit product, 'Sol Convenient Fixed Deposit,' offers a top interest rate of 4.55%. Hana Bank raised the applied interest rate on its representative fixed deposit product, 'Hana Fixed Deposit,' by up to 0.65 percentage points, reaching a maximum of 4.6%. The minimum subscription amount is 1 million won, with no maximum limit. NH Nonghyup Bank also raised deposit interest rates by 0.5 percentage points and installment savings rates by 0.7 percentage points. The interest rate for 'NH All One e-Deposit' reaches 4.6% annually. KB Kookmin Bank's 'KB Star Fixed Deposit' offers an interest rate around 4.39%. Starting from the 20th, Kookmin Bank will raise interest rates on 15 types of fixed deposits and 23 types of installment savings. Fixed deposits will increase by up to 0.5 percentage points, and for installment savings, the KB Kookmin Premium Installment Savings will increase by up to 0.6 percentage points.

Savings banks have already introduced products with interest rates in the 5% range. HB Savings Bank's 'Non-face-to-face Fixed Deposit' offers a top interest rate of 5.5% (36 months). Looking at the interest rates of major deposit products at savings banks (based on 12 months), Dongwon Jeil Savings Bank's 'Non-face-to-face Fixed Deposit' offers 5.25%, Yegaram Savings Bank's 'e-Fixed Deposit' offers 5.15%, and Korea Investment Savings Bank's 'Simple Interest Fixed Deposit' offers 5.1%. Installment savings have surpassed the 5% era, with products offering up to 10%. Welcome Savings Bank launched the 'Welbang Walking Installment Savings' with a top annual interest rate of 10%, and Gwangju Bank introduced the 'Lucky Installment Savings' offering up to 13.2% annual interest. However, special promotional products may have strict preferential conditions, so caution is advised.

Comparing Interest Rates Is Basic... 1.5 Trillion Won Flows into Banks Daily

Given this situation, various financial communities see multiple posts daily comparing deposit and installment savings interest rates. Like price comparison websites, they share information to compare deposit and installment savings products from various banks at a glance and seek to gain even a slight advantage. Some even take out loans at 3% interest rates using old installment savings or tax-saving savings products as collateral to subscribe to deposits offering 4-5% interest. However, the consensus is that considering the 15% interest income tax, the actual benefit is not significant yet.

As interest in deposits and installment savings rises, the phenomenon of large sums of money flowing into commercial banks is accelerating. The fixed deposit balance at the top 5 commercial banks (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup) reached 783.5003 trillion won as of the 14th, increasing by 22.9959 trillion won in just two weeks compared to the end of last month (760.5044 trillion won). This means about 1.5 trillion won flows into banks daily. Fixed installment savings also increased by 1.6272 trillion won to 40.9369 trillion won.