The balance of time deposits at the five major banks surpassed 1000 trillion won for the first time.
News that money is flowing into deposits is welcome, but that large figure does not directly indicate my interest income or account-opening terms.
To understand today’s deposit trends, you need to read balances, interest rates, and maturities separately.
3-line summary
1. The balance of time deposits at the five major banks surpassed 1000 trillion won.
2. The balance at the end of August was 1005조2319억원.
3. An increase in the balance is not the return on my product.
1005조원 at the End of August, Up 55조원 in Two Months
According to a report by Herald Economy, the time-deposit balance at the end of August for the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—was recorded at 1005조2319억원. This was the first time the time-deposit balance at these banks exceeded 1000조원.
The balance increased by 20조2920억원 in one month, while the increase over the past two months was 55조8321억원. During the same period, investor deposits—funds waiting to be invested in the stock market—fell to 99조7044억원 at the end of August, according to reports. Articles cited a stock-market correction and rising interest rates as factors behind the increase in deposits.
However, the total deposit balance of banks is different from the terms of products that individuals can newly subscribe to. The balance includes deposits that were already opened, as well as products with different subscription dates, durations, and preferential conditions. The statement “money has flowed into deposits” is not the same as the judgment “the interest rate I receive is high.”
The number worth noting in this trend is not 1000조원 itself, but the fact that funds moved into bank deposits over a short period. It is possible to interpret this as stronger preference for safe assets, but that interpretation alone does not determine the rate of a particular deposit or the subsequent direction of interest rates.
An Annual Rate of 3.85% Means 385만원 Before Tax
According to an SBS Biz report, the average interest rate on one-year time deposits at domestic banks in July, as compiled by the Bank of Korea, was 3.48% per year. This was an increase of 0.59%포인트 since the beginning of the year.
Some products offered higher top rates. The article mentioned annual rates of 3.85% at SC제일은행 and 경남은행, 3.81% at 전북은행, 3.77% at 부산은행, and 3.61% at 케이뱅크. The term most easily overlooked here is top rate. It does not mean the rate applies equally to every subscriber; it may be a condition offered depending on the product and the subscription date.
If 1억원 is deposited for one year at an annual rate of 3.85%, the pre-tax interest is 385만원. This means the amount before taxes are deducted from the interest. Therefore, the calculation in the article should not be read as the amount that will actually be received.
A benefit mentioned for deposits is that, unlike stocks, they do not directly experience price fluctuations. On the other hand, if the maturity does not match when the money will be needed, it is difficult to choose a product based solely on a high annual rate. Even when the interest rate is stated on a one-year basis, the actual result depends on the deposit period and applicable conditions.
Products That Let Customers Set the Maturity Directly, from 1 Month to 24 Months
전북은행 announced on the 2nd that it had launched the non-face-to-face product JB 다이렉트(자유만기)예금. Customers can set the maturity date within 1 month to 24 months, and the term can be set not only in monthly increments but also in daily increments.
The publicly disclosed base rates are 2.3% annually for periods of 1 to less than 3 months, 2.5% annually for periods of 3 to less than 6 months, and 3.5% annually for periods of 6 to less than 12 months. The rate for the 12 to less than 18 months range is 3.76% annually; the rate for 18 to less than 24 months is 3.65% annually, and the rate for 24 months is 3.5% annually. The bank said that the base rate for each period applies without separate preferential-rate conditions.
This example shows why time deposits are difficult to compare based only on “the highest rate.” 3.76% is not the rate for every term, but the rate for a specified maturity range. If the date when a lump sum will be needed has already been decided, whether the maturity date can be matched to reduce unnecessary early termination may be a more direct condition than a single-digit difference in the interest rate.
Real-World Transactions Converting Deposits into Tokens Have Not Yet Begun
Deposits are also being tested in forms that do not remain only as balances in bank accounts. Hana Bank announced that, ahead of the second phase of Project Hangang, the Bank of Korea’s digital-currency pilot project, it began implementing basic terms and conditions for deposit-token transactions on the 28th of last month. These transactions convert deposits into digital forms of equal value for use in payments and remittances.
The reported terms include a function that automatically converts linked deposits into deposit tokens when the balance is insufficient, as well as a function for transfers between users. During the project period, an individual’s maximum holding limit was set at 1000만원, while the total conversion limit from deposits to tokens was set at 1억원.
However, this must be distinguished from the result of the launch of real-world transactions. A Bank of Korea official explained that real-world transactions would be difficult in September and that the bank was guiding users toward the fourth quarter, while it was difficult to specify a concrete launch date because of security checks and institutional reviews. An official was also reported as saying that Hana Bank and BGF Retail were preparing the payment environment at CU stores nationwide, with a target opening in December.
A time-deposit balance of 1000조원 is a number showing the scale of money flowing toward deposits. For my own choices, it is more accurate to read pre-tax amount, top rate, and applicable period as one package. Even when a new method such as deposit tokens is introduced, whether the date when it will actually be available for use has been confirmed must be considered separately.
References
Tags #Deposits #TimeDeposits #DepositRates #BankDeposits #FiveMajorBanks #DepositBalance #TopRate #PreTaxInterest #Maturity #전북은행 #FlexibleMaturityDeposit #DepositTokens #ProjectHangang