Kookmin Bank Offers
0.5%P Preferential Interest Rate to Maturity Customers
Shinhan Bank Holds Maturity Achievement Event
As the maturity of the 'Youth Hope Savings' account, which has over 2 million young subscribers, approaches in earnest, commercial banks are consecutively launching high-interest special products and events to attract deposits worth around 20 trillion won. Although the government has opened the way for linked subscriptions to the 'Youth Leap Account,' since it requires an additional five years until maturity, banks are trying to capture the demand of hesitant depositors.
According to the financial sector on the 22nd, KB Kookmin Bank is selling a special product called '2014-1 Joint Purchase Time Deposit' with a limit of 4 trillion won until March 12. The joint purchase time deposit applies differentiated interest rates depending on the amount sold (balance) until the end of the sales period: 3.40% per annum for sales amounts up to 10 billion won, and 3.50% per annum for sales amounts exceeding 10 billion won.
This product is designed with the maturity of Youth Hope Savings subscribers in mind. Youth Hope Savings is a policy financial product introduced during the Moon Jae-in administration in February-March 2022, and maturities have started this month. It targets youths aged 19 to 34 at the time of subscription with an annual income of 36 million won or less in the previous year, offering about a 10% interest rate including basic and preferential interest rates plus a savings encouragement bonus. The savings encouragement bonus is 2% of the first-year deposit amount and 4% of the second-year deposit amount. If one deposited the maximum monthly amount of 500,000 won for two years starting in 2022, the maximum amount receivable at maturity would be 13.11 million won. Approximately 2.86 million people subscribed to Youth Hope Savings, and it is known that about 830,000 of them terminated early.
KB Kookmin Bank’s joint purchase time deposit limits the amount to between 1 million and 14 million won, similar to the maximum amount receivable from Youth Hope Savings. Additionally, this product offers a preferential interest rate of 0.5 percentage points to those whose Youth Hope Savings have matured. The highest interest rate accordingly is 4.0% per annum, surpassing the 3.55-3.60% interest rates of time deposits at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NongHyup) as of the previous day.
Shinhan Bank is also conducting a 'Shinhan Youth Hope Savings Maturity Achievement Celebration Event' until July 31. Shinhan Bank is currently selling the 'Youth First Savings' (maximum monthly deposit of 300,000 won, 12-month maturity) with a basic interest rate of 3.5% for those aged 18 to 39 at the time of subscription. Until the end of July, those whose Youth Hope Savings mature will receive a preferential interest rate of 0.5 percentage points. If other preferential conditions such as salary transfer, Shinhan Card usage, and Shinhan Super SOL membership are met, the interest rate can rise up to 6.50% per annum. Other banks are also consecutively launching high-interest savings products with rates in the 5-6% range targeting young people.
The reason banks are launching these products is to re-attract the approximately 2 million customers and deposits worth 20 trillion won that are reaching maturity in Youth Hope Savings. Financial authorities have opened the way for those whose Youth Hope Savings mature to subscribe to the policy financial product Youth Leap Account launched under the Yoon Suk-yeol administration, but since the maturity is five years and part of the deposit period applies a variable interest rate, many youths feel burdened.
The Youth Leap Account is a product where youths aged 19 to 34 pay between 400,000 and 700,000 won monthly for five years, and the government matches the payment amount with support funds. The purpose is to help form a lump sum of 50 million won over five years. Linked subscribers can make lump-sum payments within the range of 2 million won to the maturity amount as desired. If the maximum amount of about 13 million won is paid in a lump sum, it is recognized as having paid for 18 months. However, the deposit amount must wait for the same five-year maturity as the existing product to be received.
According to authorities, the number of linked subscription applicants over 15 business days until the 16th was 415,000. A Financial Services Commission official said, "Currently, linked applications for the Youth Leap Account are progressing smoothly, and we plan to continue improving the system in the future," adding, "Although it takes five years and other investments may be possible in the meantime, the Youth Leap Account clearly has advantages such as maintained interest rates, matching support funds, and tax-exempt benefits."
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