Non-face-to-face Application via 11 Bank Apps
5-Day Rotation System Implemented This Month, Applications Open for First 2 Weeks from July
Preferential Interest Rates Require Card Usage, Maturity Maintenance, and Marketing Consent
"Conditions for Receiving 5.5~6.5% Interest Rates Are Strict"
The application period for the Youth Leap Account, designed to help young people save a lump sum, will begin on the 15th of this month. The Financial Services Commission announced that it will continue efforts to ease preferential interest rate conditions by each bank until the final interest rate announcement date on the 14th of this month.
The banks handling the Youth Leap Account include the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) as well as 11 others such as Industrial Bank of Korea, Busan Bank, Gwangju Bank, Jeonbuk Bank, Gyeongnam Bank, and Daegu Bank. SC First Bank, which was initially scheduled to participate, will start accepting applications from January next year.
First, the application period this month is from the 15th to the 23rd. From the 15th to the 21st, applications will be accepted on a five-day rotation system based on the last digit of the birth year. Those whose birth year ends with 3 or 8 can apply on the 15th, 4 or 9 on the 16th, 0 or 5 on the 19th, 1 or 6 on the 20th, and 2 or 7 on the 21st. Applications will be accepted regardless of birth year on the 22nd and 23rd. From next month, applications will be accepted during the first two weeks of each month. Applications can be made non-face-to-face via the handling bank’s application (app) from 9:00 AM to 6:30 PM on the specified dates.
5-year maturity, monthly deposits allowed up to 700,000 KRW
The Youth Leap Account allows flexible monthly deposits up to 700,000 KRW, with a maturity period of 5 years. The account remains active even if no deposits are made after the first month, meaning only the initial deposit is required. Government contributions are provided differentially (up to 24,000 KRW per month) based on individual income level and deposit amount, and interest income is tax-exempt.
Eligibility for the Youth Leap Account requires meeting both individual income and household income criteria for young people aged 19 to 34 (based on the account opening date). However, the period of military service (up to 6 years) is excluded from the age calculation. Those who have been subject to comprehensive financial income taxation (when financial income such as interest and dividends exceeds 20 million KRW) even once in the past three years before application are not eligible.
Individual income must be 75 million KRW or less, and government contributions and tax-exempt benefits vary according to income. If the total salary in the previous tax period (for those applying in 2023, from January to December 2022) is 60 million KRW or less, both government contributions and tax-exempt benefits apply; if it exceeds 60 million KRW but is 75 million KRW or less, only tax-exempt benefits apply. Before the income for the previous tax period is finalized, income from two years prior is used as the basis. Individual income is updated annually based on the application date to adjust government contribution eligibility and amount.
Household income must be 180% or less of the median income (according to the Ministry of Health and Welfare notice), including the applicant and household members. Household members include the applicant’s spouse, parents, children, and minor siblings listed on the applicant’s resident registration certificate. To prevent disadvantages due to changes in household members, changes in household income are not reflected.
Youth Hope Savings subscribers can apply after cancellation
Those who subscribed to the Youth Hope Savings launched last year cannot simultaneously subscribe to this product because the two products have similar objectives. However, subscription is possible after maturity or early cancellation of Youth Hope Savings. To strengthen support for low-income youth, simultaneous subscription is allowed for those enrolled in welfare and employment products (such as Youth Tomorrow Savings Account, Youth (Employed) Tomorrow Filling Deduction, and local government welfare and employment support products).
Applicants can check age requirements and whether they are subject to comprehensive financial income taxation via the app, while individual and household income requirements are verified non-face-to-face by the Korea Inclusive Finance Agency. Verification of household income requires consent for income inquiry from the applicant and household members. After verification, the bank will inform the applicant of eligibility. Applications can be submitted to multiple banks, but account opening is limited to one bank. Eligible youth can select one bank and open an account between July 10 and July 21 (or if applied between June 15 and June 23, open the account within that period).
The interest rate is fixed for the first 3 years and variable for the following 2 years. The variable interest rate calculation cycle will be announced at the time of the final interest rate announcement. The base rate and income- and bank-specific preferential rates will be finalized and announced on the 14th. At the first announcement on the 8th, the highest combined interest rate was around 5.5% to 6.5% annually, but adjustments are expected after comparison among banks. Yoo Jae-hoon, Director of the Financial Consumer Bureau at the Financial Services Commission, explained, “We are working to ease the stringent preferential interest rate conditions and improve transparency so that preferential rates by bank can be easily compared.”
Preferential interest rates are difficult to obtain
Nonetheless, there are criticisms that obtaining preferential interest rates is practically difficult. The highest rate offered was 6.5% by Industrial Bank of Korea. Banks set the base interest rate between 3.5% and 4.5%. The income preferential rate for youth with an annual personal income of 24 million KRW or less is set at 0.5% by all 11 banks. Additional preferential rates of 1.5% to 2% points are added if conditions are met.
To receive preferential rates, applicants must meet conditions such as salary transfer, card payment performance, consent to marketing information, and maintaining the account until maturity. Shinhan, Woori, Hana, and NH Nonghyup banks offer preferential rates to those without prior deposit or savings account history at their bank. Because of this, some young people criticize, “This policy was made as a presidential pledge, but it’s hard to get a 6% interest rate.”
However, commercial banks also have their reasons. A bank official said, “Current deposit and savings interest rates are around 3% to 4% even if similar conditions are met, but the Youth Leap Account interest rate is around 5.5% to 6.5%,” adding, “It is much higher than loan interest rates, so it inevitably results in negative margins. We cooperated despite the losses.”
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