Applications for Youth Leap Account Open from the 4th
Government Matching Contribution Raised: 24,000 KRW to 33,000 KRW per Month
Deposit 700,000 KRW Monthly... Up to 50.61 Million KRW After 5 Years
Effective Annual Interest Rate Reaches Up to 9.6%, Boosting Popularity
As savings and installment deposit interest rates rapidly decline, there is growing interest in the Youth Leap Account, which boasts an "annual 9% savings effect." Amid analyses suggesting that the merit of the Youth Leap Account is increasing due to the interest rate cuts, the Korea Inclusive Finance Agency (KIFA) will operate the March subscription period for the Youth Leap Account from the 4th to the 14th.
The Youth Leap Account is a savings product where, over a 5-year maturity period, you can freely deposit up to 700,000 KRW per month (interest rate 4.5~6.0% per annum), and the government provides additional matching contributions on the monthly deposits. The deposit amount can be selected from a range of 1,000 KRW to 700,000 KRW per month. Depositing 700,000 KRW monthly for 5 years can accumulate a lump sum of 50 million KRW at maturity.
Especially from this year, the matching contribution limits (400,000 KRW, 500,000 KRW, 600,000 KRW per month) across all income brackets have been expanded up to the deposit limit (700,000 KRW per month), and an additional matching contribution at a rate of 3.0% is provided within those brackets. Accordingly, when combining bank interest, government contributions, and tax-exempt benefits at maturity, the yield can reach up to 9.54% annually, equivalent to subscribing to a general savings product with that interest rate. For subscribers earning less than 24 million KRW annually who deposit 700,000 KRW monthly for 5 years (total 42 million KRW), they can receive 50.61 million KRW.
Youth Leap Account non-face-to-face consultation center counselors are providing consultations in Jung-gu, Seoul. Photo by Kang Jin-hyung
The Youth Leap Account is popular amid the trend of interest rate cuts. According to the financial sector, during the subscription period from January to February this year, an average of about 23,000 people applied daily. This is more than five times the average daily subscription number (about 4,000) in December last year. The cumulative number of Youth Leap Account subscribers has grown to 1.7 million, which accounts for about 28% of the estimated eligible youth population (6 million). This is interpreted as an effect of the relative attractiveness of the Youth Leap Account increasing amid the interest rate cut trend.
It is also analyzed that the government's increase of the maximum monthly matching contribution from 24,000 KRW to 33,000 KRW this year has contributed to the popularity of the Youth Leap Account. Previously, if the account was not maintained for 5 years, all matching contributions were reclaimed, but from this year, subscribers who maintain the product for more than 3 years are also provided with tax-exempt benefits and 60% of the matching contributions. From the second half of this year, partial withdrawals within 40% of the principal deposited will be allowed if the account is maintained for more than 2 years. Additionally, the government is offering various incentives to encourage youth subscriptions. Representative examples include partial withdrawal services, credit score bonuses, and strengthened linkage with the Youth Housing Dream Subscription Account.
The March Youth Leap Account subscription can be applied for starting today through the mobile applications of the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) and other handling banks such as IBK Industrial Bank, SC First Bank, IM Bank, Busan Bank, Gyeongnam Bank, Gwangju Bank, and Jeonbuk Bank. Applicants must meet requirements such as being aged 19 to 34 as of the account opening date and having a total personal income salary of 75 million KRW or less in the previous tax period. Single-person households guided as eligible for this month can open accounts from the 20th of next month until April 11th, and households with two or more people can open accounts from the 31st of next month until April 11th.
Meanwhile, according to the Bank of Korea, the interest rate on regular installment deposits at deposit banks (based on new handling amounts) was only in the 3.2% range annually as of December last year. Market bank deposit interest rates have long been in the 2% range annually, and even savings banks and internet-only banks, which used to offer relatively higher rates, have recently been lowering rates below 3% annually one after another.
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