Deposit Rates Rise Again... Products Offering Mid-to-High 3% APY Emerge
As banks one after another raise interest rates on time deposits (products that pay interest when money is held for a set period), deposit products offering mid-to-high 3% annual rates are rapidly appearing. With market rates climbing, depositors can now earn higher interest. The one-year deposit rates at major commercial banks have risen to the 3.6% range.
Woori Bank on the 7th raised the one-year maturity rate on its 'WON Plus Deposit' from 3.50% to 3.60% per annum, an increase of 0.10 percentage points. This was an additional adjustment about 20 days after two rate hikes last month. Hana Bank also raised the one-year rate on its 'Hana Time Deposit' from 3.40% to 3.60% per annum on the 1st of this month. It was the third hike in a month, with a cumulative increase of 0.40 percentage points.
This trend has spread to other banks. Shinhan Bank raised the one-year rate on its 'Solchan Time Deposit' to 3.50% per annum on the 30th of last month, and KB Kookmin Bank also raised the rate on its 'KB Star Time Deposit' for maturities of one year to under two years to 3.50% per annum on the 21st of last month.
Internet-only banks are continuing their battle for deposits, offering rates in the 3.7% range. NH NongHyup Bank raised the rates on its 'NH All One e Deposit' by an additional 0.10 to 0.35 percentage points depending on the maturity on the 8th, bringing the one-year rate to 3.65% per annum. This came roughly two weeks after the bank raised base rates on deposits and installment savings by up to 0.25 percentage points on the 23rd of last month. K Bank's 'Flexible Interest Time Deposit,' launched on the 29th of last month, offers 3.71% per annum for one-year maturities, and Kakao Bank has also raised its time deposit rate to around 3.70%. Toss Bank's 'Interest First Time Deposit' offers 3.60% per annum for one-year maturities.
Along with the rate hikes, funds are flowing into banks. The combined time deposit balances at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—stood at 1,006.0871 trillion won at the end of September, up 85.52 billion won from the previous month. Time deposit balances at the five major banks have increased for five consecutive months since May, and the growth has continued even after the total surpassed 1,000 trillion won for the first time at the end of August.
