Don't Miss the Last Ride on High Interest Rates... Investment Enthusiasts Flock to 12% Annual Special Offer [1mm Financial Talk]

As expectations grow that the Bank of Korea's base interest rate cut is imminent, savers looking to take advantage of the high interest rates at the last minute are becoming more active. Special deposit products offered by various financial companies with annual interest rates ranging from 6% to 10% are attracting customers despite relatively strict preferential conditions.

According to the financial sector on the 8th, Saemaeul Geumgo's installment savings product, 'MG Hope Sharing Yongyong Installment Savings,' surpassed 30,000 subscribers last September. Yongyong Installment Savings is a product launched by Saemaeul Geumgo to address low birth rates, limited to 50,000 accounts, offering a maximum annual interest rate of 12%.

Recently converted to a commercial bank, iM Bank's commemorative product, The Coupon Installment Savings, sold out early. The Coupon Installment Savings is a one-year fixed installment savings product offering a maximum annual interest rate of 10.0%. Although the subscription amount is small, ranging from 10,000 to 200,000 KRW, it gained popularity due to relatively lenient preferential conditions such as new subscription and consent to notifications. As customers flocked, iM Bank extended the sales period of The Coupon Installment Savings once.

The high interest rates of these sold-out products present a significant advantage compared to general deposit products of commercial banks. According to the Korea Federation of Banks, as of this day, the one-year fixed deposit interest rates of the five major commercial banks ranged from a maximum of 3.35% to 3.80% annually, and fixed installment savings rates ranged from a maximum of 3.25% to 4.65% annually.

[Image source=Yonhap News]

Alongside those offering high-interest products for social contribution or customer expansion purposes, major commercial banks have recently been releasing high-interest deposit products one after another. This is to manage the expanding interest rate spread between loans and deposits, which has increased due to rising household loan rates, by offering high preferential interest rates.

KB Kookmin Bank launched 'KB Star Installment Savings,' offering a maximum annual interest rate of 8.0%, limited to 100,000 accounts, and Shinhan Bank introduced 'Youth First Installment Savings,' applying a maximum annual interest rate of 8.0% for young people aged 18 to 39. Additionally, Hana Bank and Woori Bank are also operating installment savings products with high preferential interest rates.

The reason savers are flocking to these high-interest installment savings products is the perception that the current base interest rate has peaked. Following the U.S. Federal Reserve's 'big cut' of 0.50 percentage points in the base interest rate, the market widely expects the Bank of Korea to cut its base interest rate as early as this month. When the base interest rate is lowered, deposit interest rates inevitably are affected in some form. Due to this influence, the balance of fixed deposits and installment savings at the five major commercial banks increased by about 6.2 trillion KRW compared to the previous month.

The difficulty in finding suitable investment destinations at this point also reinforces this trend. The recently soaring real estate market has stalled due to the government's loan regulation policies. The stock market is also stagnant. The amount of investor deposits, which are standby funds for the stock market, is not increasing significantly. According to the Korea Financial Investment Association, as of the 4th, investor deposits stood at about 52.7 trillion KRW, which is below the early last month (52 trillion KRW) and early August (54.6 trillion KRW) levels.

A representative from a commercial bank said, "If the base interest rate cut is implemented, deposit interest rates are also likely to be adjusted quickly." He added, "If you have surplus funds that you do not plan to use in the medium to long term or are planning to start saving anew, rushing to subscribe now to enjoy the current high interest rate benefits is one way to respond to the interest rate cut."