Deposit rates in the high-3% range bring money back to bank deposits

With deposit rates rising to the mid-to-high 3% range, investors' money is flowing back into bank deposits. For a long time, the market had been driven by the perception that keeping money in deposits meant losing out. But as the era of high interest rates returns, the flow of investor funds is changing.

As the Bank of Korea has raised its base rate (the benchmark rate at which banks lend money) in succession, commercial banks' time deposit rates have risen as well. With major commercial banks raising deposit rates one after another this month, time deposit rates at the five largest commercial banks have jumped to an annual mid-to-high 3% range. The increase in time deposit rates at major commercial banks following the BOK's two base rate hikes has also influenced the movement of funds.

As a result, time deposit balances at the five largest commercial banks surpassed 1,000 trillion won for the first time on record as of the end of last month. Park, a office worker in her 20s in Yeongdeungpo District, Seoul, said she is focusing more on deposits and installment savings as stock market volatility grows.

"If rates rise once more by 0.25 percentage points within the year, the shift of funds into banks could deepen further," said Kang In-soo, an economics professor at Sookmyung Women's University.