The Bank of Korea froze the base rate at 3% on the 16th, but it appears that an increasing number of banks are lowering the interest rates on deposits. If the Bank of Korea implements two to three additional rate cuts this year as the market expects, the decline in deposit rates is likely to accelerate further. Currently, the interest rates on deposits at major banks are precariously holding just above 3%. Although there are few savings products offering interest rates in the 5% range for one-year terms, they are still available and warrant attention.
According to the financial sector on the 25th, Woori Bank has lowered the base rates for major deposit products by as much as 0.5 percentage points since the 20th. The base rate for the 'Woori First Regular Savings' product with a maturity of 12 months has fallen from 2% to 1.5%. The base rate for the 'Woori First Transaction Preference Time Deposit' now stands at 1.9% to 2.3%, decreasing by up to 0.3 percentage points depending on maturity.
Internet-only banks and regional banks are also rapidly decreasing deposit rates. Kbank has adjusted the rates for key deposit products, including 'Code K Time Deposits' and 'Code K Free Savings,' down by 0.1 to 0.2 percentage points based on maturity since the 21st. Jeonbuk Bank and Gwangju Bank, both under JB Financial Group, have each lowered their base rates on major deposit products by 0.1 to 0.35 percentage points and 0.05 to 0.2 percentage points, respectively.
Despite the Bank of Korea taking a brief pause after lowering the base rate twice in a row in October and November last year, why are banks reducing deposit rates? Banks finance themselves by issuing bank bonds or selling deposit products, and with recent decreases in bank bond rates, they no longer need to maintain high deposit interest rates. According to the Korea Financial Investment Association, the average rate for one-year bank bonds (non-guaranteed, AAA) on the 23rd was 2.856%, down about 0.4 percentage points compared to two months ago (3.232%).
According to the Korea Federation of Banks, as of the 23rd, only five of the 19 domestic banks' one-year regular deposit products had base rates exceeding 3%. Jeonbuk Bank's 'JB Direct Deposit Account' has the highest rate at 3.15%, while NH Nonghyup Bank's 'NH All-in-one e-deposit,' Shinhancard's 'Hey Time Deposit,' and KakaoBank's 'Time Deposit' all stand at 3.10%.
If preferential rates are included, iM Bank (formerly Daegu Bank)'s 'iM Main Transaction Preferential Deposit (First Meeting Customer Type)' reached an interest rate of 3.31%. The basic rate for this product is 2.66%, and obtaining a preferential rate requires actions such as issuing a credit card or enrolling in mobile banking.
Only five of the highest interest regular savings products with a maturity of one year have rates exceeding 5%. All are flexible savings plans, and eligibility is restricted to groups such as new parents, caregivers, MZ generation, and small business employees; individuals should take this into consideration when applying for the products. Jeju Bank's 'MZ Plan Savings' is a product that is only available to those under 39 years of age, with a basic rate of 3.40%. When including the preferential rates that can be obtained by fulfilling conditions like 'continuing payment at least once' and 'achieving target amounts,' the highest rate can reach 5.40%.
Among regular savings products, the one with the highest basic rate is Kbank's 'Code K Free Savings,' with an interest rate of 3.70%. Following is KakaoBank's 'Free Savings' at 3.60%, and Gyeongnam Bank's 'BNK Better Free Savings' at 3.45%.