Which Products Are Best for Smartly Saving a Lump Sum of Holiday Allowance for Our Kids?

From Savings with Up to 10% Preferential Interest Rates
to Savings Offering Childbirth Support Funds Upon Birth

If you are a parent, you may have wondered how to use the allowance your child receives during holidays in a meaningful way. In that case, how about signing up for a savings plan that can help you save the holiday allowance wisely and turn it into a lump sum? From products offering up to 10% interest with preferential rates to savings plans for babies in the womb that provide congratulatory money from the bank upon childbirth, here are various savings products from commercial banks.

[Image source=Getty Images]

Among commercial banks, the savings product offering the highest interest rate for parents raising children and their kids is KB Kookmin Bank’s 'KB Ai Sarang Jeokgeum' (KB Child Love Savings). The base interest rate is 2%, but up to 8 percentage points can be added under certain conditions, allowing for a maximum of 10%. Submitting a pregnancy confirmation document grants an additional 1% point, and if the child allowance is received at least six times via a KB Kookmin deposit account from the subscription date until the day before maturity, an additional 3% annual interest is added. This applies when at least 100,000 KRW is deposited each month on the 25th with the depositor’s name or description including terms such as 'child, county office, district office, welfare, childcare, family, household, resident, women, society, children’s happiness department,' etc. The subscription period is 12 months, with monthly deposits ranging from 10,000 KRW to 300,000 KRW. Deposits can be made freely from the first to the last day of each month, and interest is paid in a lump sum at maturity. If you deposit 300,000 KRW monthly for 12 months, you will receive a total of 3,795,000 KRW (before tax deduction), including 195,000 KRW in interest at maturity. The sales limit is 50,000 accounts, and sales end once the limit is reached.

BNK Busan Bank’s 'BNK Agi Cheonsa Jeokgeum' (BNK Baby Angel Savings), which offers preferential interest rates for childbirth and multiple children, is also worth noting. The subscription period can be chosen between 12 and 24 months, with a minimum annual interest rate of 2% and up to 6 percentage points in preferential rates, providing a maximum of 8% annual interest. The subscription amount ranges from 10,000 KRW to 300,000 KRW per month. If you deposit 300,000 KRW monthly for 24 months with the maximum 8% interest rate applied, you can save a total of 7,800,000 KRW, including 600,000 KRW in pre-tax interest on the principal of 7,200,000 KRW.

Child Allowance / Source=Yonhap News

During the subscription period, preferential interest rates of 4.5 percentage points for the first childbirth, 5 percentage points for the second childbirth, and 5.5 percentage points for the third or more childbirths are provided. If there are two or more minor children under 19 years old as of the subscription date, an additional 2 percentage points preferential interest rate is granted. Additionally, new customers and holders of the bank’s Housing Subscription Savings receive 0.1 percentage points each in preferential interest rates.

Hana Bank is also selling the 'Hana Ai Kium Jeokgeum' (Hana Child Nurturing Savings) until the end of this year (December 31), limited to 50,000 accounts, offering a base annual interest rate of 2% and a maximum of 8%. Preferential interest rates are provided for recipients of child-rearing allowances and pregnant women, with additional special preferential rates for families with multiple children. The subscription amount ranges from a minimum of 10,000 KRW to a maximum of 300,000 KRW, and interest is paid at maturity.

IBK Industrial Bank offers the 'IBK Bumo Geubyeo Udae Jeokgeum' (IBK Parent Allowance Preferential Savings) with a base annual interest rate of 2.5% and a maximum of 6.5% (12 months, before tax). The deposit period is one year, with monthly deposits ranging from 10,000 KRW to 500,000 KRW.

There are also products for pregnant women whose babies are still in the womb. Shinhan Bank’s '40 Weeks, Mom Jeokgeum' offers a 2% preferential interest rate if 90% or more of the 40-week savings (at least 36 deposits) is achieved, and an additional 0.5% preferential interest rate upon childbirth. This product is sold to the first 30,000 customers on a first-come, first-served basis until the end of this year (December 31). A special feature is that if childbirth occurs during the savings period and the total savings amount is at least 300,000 KRW, a congratulatory money of 300,000 KRW is provided.