[Real Estate Finance] "Let's catch the last train before interest rates drop"... Focus on high-interest savings and time deposits

High-Interest Savings and Time Deposit Last-Chance Products in Focus
Special Limited-Quantity Offers with Subscription Conditions Also Popular

With the possibility of a base interest rate cut in the second half of this year, high-interest savings and installment savings products are gaining attention as last-chance offerings. Banks are actively trying to retain customers who might shift to stocks or funds by launching special high-interest products that offer rates well above twice the base rate (3.5%). Products targeting specific customer groups such as young people or families with multiple children are also being released one after another.

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Capture High-Interest Savings and Installment Savings

According to the financial sector on the 29th, the demand deposit balance at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at approximately 616 trillion KRW at the end of last month, down 32 trillion KRW from the previous month (648 trillion KRW). Demand deposits at these five banks increased from 590 trillion KRW in January to 614 trillion KRW in February and 648 trillion KRW in March but turned to a decline last month.

Demand deposits differ from regular time deposits in that deposits and withdrawals are freely allowed, and they are considered funds waiting to be invested. The outflow of demand deposits indicates that financial consumers have moved their money to other investment destinations. A representative destination is installment savings. The balance of regular installment savings at the five major banks at the end of last month was 32.453 trillion KRW, an increase of 1.0803 trillion KRW compared to the previous month.

As of the previous day, the average base interest rate of 20 bank regular installment savings products (12 months, fixed monthly deposits, simple interest) posted on the Bankers Association consumer portal was 3.3%, and the average highest interest rate including preferential rates was 4.3%. The product with the highest interest rate is Gwangju Bank’s 'Telepathy Installment Savings,' offering up to 6% per annum. The next highest is BNK Gyeongnam Bank’s 'Main Transaction Premium Installment Savings,' offering up to 5.15% per annum. Additionally, Gwangju Bank’s 'Travel Sketch Namdo Tour Installment Savings' and Jeonbuk Bank’s 'JB Strong Jeonbuk Soccer Love Installment Savings' offer interest rates exceeding 5% per annum.

Regular time deposits have mostly dropped to the 3% range due to the possibility of a base rate cut and other factors, but there are still products offering up to 4% per annum. DGB Daegu Bank’s 'DGB Together Deposit' offers a base interest rate of 3.7% and a maximum interest rate of 4.15% per annum. To commemorate receiving the seventh commercial bank conversion approval in 32 years on the 16th, DGB Daegu Bank has been implementing various customer appreciation programs including preferential interest rates and exchange rate benefits since the 20th. In early June, they plan to launch a new installment savings product with a maximum annual interest rate of 20%.

Eye-Catching High-Interest Special Sales... Hurry Before Early Closure

As the timing of the base interest rate cut is expected to be delayed compared to initial forecasts, banks that had been cautious are now launching special sales with limited account numbers one after another. Taking advantage of these can be a good opportunity to build a lump sum.

BNK Busan Bank launched the ‘BNK Baby Angel Installment Savings’ on the 20th, offering up to 8% annual interest. It is sold with a limit of 10,000 accounts until the end of the year and will close early once the limit is reached. The base interest rate of this product is 2% per annum, but childbirth-related preferential rates add up to 5.5 percentage points. During the subscription period, the first childbirth grants 4.5 percentage points, the second childbirth 5 percentage points, and the third or more 5.5 percentage points. If there are two or more children under 19 years old as of the subscription date, an additional 2 percentage points are granted. Furthermore, up to 0.5 percentage points can be added depending on Busan Bank’s performance.

NH Nonghyup Bank launched the 'NH All One e-Installment Savings,' a non-face-to-face exclusive product with a maximum annual interest rate of 5%, on the 9th for the first 50,000 accounts. The subscription period is one year, and customers can save up to 300,000 KRW freely each month.

Gwangju Bank is selling the 'KJB Apartment Love Regular Deposit' with a maximum annual interest rate of 4.06% until the end of the year. Sh Suhyup Bank offers up to 3.90% annual interest on the 'Sh First Meeting Preferential Deposit' for the first 100,000 accounts. Gyeongnam Bank is selling 'The Dundeun Deposit' with a maximum annual interest rate of 3.85% until June. Jeju Bank also introduced the 'J Regular Deposit' with a maximum annual interest rate of 3.75% starting last month.

"Preempting Potential Customers"… Secondary Financial Sector Targets Young Generation

The secondary financial sector has recently been launching high-interest products targeting younger age groups.

Saemaeul Geumgo launched the ‘MG Hope Sharing Yongyong Installment Savings’ on the 1st of last month, offering an interest rate of 12% per annum, the highest among commercial financial institutions. This product was launched to overcome low birth rates and is only available to children born from December last year to this year. The base interest rate is 6% per annum, with preferential rates of 4 percentage points for the first child, 5 percentage points for the second, and 6 percentage points for the third or more children. In depopulated areas, a preferential rate of 6 percentage points is provided regardless of the number of children, resulting in a 12% interest rate. For newborns opening their first-ever bank account, a birth congratulatory gift of up to 200,000 KRW per person is additionally provided.

Despite a shrinking deposit scale due to worsening business conditions, the savings bank industry has been releasing products targeting children and youth one after another. Welcome Savings Bank expanded and renewed the ‘Welcome Love for Children Regular Installment Savings.’ Previously, it offered up to 4% annual interest to parents with children under 10 years old, but from the 7th, it provides up to 10% annual interest to children under 16 years old or their parents. The base interest rate is 1% per annum, with preferential rates of 1 percentage point (one child), 2 percentage points (two children), or 5 percentage points (three or more children) depending on the number of children under 16. This product succeeded in attracting over 3,000 subscribers within two weeks of launch.

OK Savings Bank focused on the young generation. The ‘Like the First Time OK Youth Regular Deposit and Installment Savings,’ launched on the 17th, offers a maximum interest rate of 5% per annum and is exclusively for those aged 20 to 34. For regular deposits, deposits between 1 million and 5 million KRW are possible, with a maximum interest rate of 4.21% per annum. For installment savings, monthly deposits range from 100,000 to 500,000 KRW, enjoying a maximum interest rate of 5% per annum. This special sale aims to help young people build assets, and sales will end once the limits of 100 billion KRW (deposits) and 10,000 accounts (installment savings) are reached. A financial sector official said, “As the low birth rate issue has emerged as a social problem recently, a trend of launching products targeting younger age groups as part of ESG (environment, social, governance) management is underway. It also has the effect of preempting future customers such as minors.”