Best Savings Rates in South Korea in 2022 – that will be the topic of today’s article.
Before beginning, it has to be remembered that it remains our position that saving is a losing game in an era of 0% interest rates, compared to long-term investing.
If you want to invest in more productive assets as an expat, don’t hesitate to contact me, email (email@example.com) or use the WhatsApp function below.
Table of Contents
Savings Account – In general, a savings account is a type of account offered by banks and other financial institutions for keeping money safe.
As the money deposited into a savings account is generally managed by a bank or any other reputed financial institution, the funds are considered to be safe and secure.
One of the main drawbacks while depositing money in a savings account is that people would generally be offered a very low interest compared to other traditional investment options such as stock trading.
However, people who want to access their funds whenever they want and don’t want to go aggressive income while opting for steady growth, then they would generally choose savings accounts as the best option available.
While most of the saving accounts offer accessibility of funds without charging additional fees, deposit accounts might charge an early withdrawal fee when a person tries to withdraw money before the maturity of the deposit.
A deposit account is known to offer higher interest rates in contrast to a traditional savings account.
The funds in a savings account can be accessed from an ATM with the help of a debit card or credit, with the help of net banking, using the credit/debit card at the selected merchant locations, and finally by approaching a bank.
Everything you need to know:
People who are willing to move over to South Korea might go there for a variety of reasons, whether it is for a job or acquiring education, or any other particular reasons.
Before moving there, individuals are required to take care of important aspects such as gathering all the necessary documents, applying for a visa, searching for a house to live in, and others.
After moving there, one of the most important things that should be done by an individual is opening a bank account. A bank account is very necessary for a person to manage their finances, make payments, and sometimes (for employees) the salary might even be deposited into a bank account.
Moreover, based on factors like attractive salaries and great potential for savings, South Korea has gained a reputation as one of the best destinations for expats.
A downside to the attractive salaries offered in South Korea is the personal income tax rates, which can be as high as 42% depending on the salary of an individual.
Hours – Usually, people from overseas that moved into South Korea might experience a bit of inconvenience when it comes to the timings. The banks as well as the ATMs might have limited working hours compared to those in a person’s country of origin.
Although ATMs are available all over the country, the time might be limited. Some of the major bank ATMs will be closed during the night times while some bank ATMs might be closed even earlier.
Coming to the working hours of a bank, the most common working hours are from 9 AM to 4 PM and operate from Monday to Friday. Almost all the banks will have an hour break during the afternoons and the banks won’t be operating during weekends.
As most expats are attracted to living in South Korea, banks usually operate in the same way that normally operates in places such as Europe and North America.
Even the financial institutions in South Korea are used to foreign customers, which makes it easy for non-residents to acquire and manage their financial needs and services.
Adding to that, some of the banks and financial institutions offer specialized products and services, which have been specifically designed for non-residents.
How to open an account – Unlike most other countries, a person who wants to open a bank account in South Korea is required to visit a branch of the bank in person. There is no possibility of opening a bank account online in South Korea.
Anyhow, a person can be able to open an account without having to visit a branch of the bank physically by having an account with an international bank that has branches in South Korea.
There won’t be a necessity for a prior appointment with the bank for opening an account. You can walk in directly with all the necessary documentation, select a queue ticket, and wait for your turn.
Most banks in major cities such as Busan and Seoul have employees that speak English. However, if you are living in a rural area that isn’t as developed as these areas, you might have to wait until an English-speaking employee is available.
It is better to be prepared as you might have to reschedule your visit if the English-speaking employee of the bank is on leave.
Requirements – In order to open a bank account in South Korea as an expat, you will be asked to present the following documents.
One of the major requirements to open an account as a foreigner in South Korea is the Alien Residence Card, which is also one of the hardest things to acquire.
When you arrive in South Korea, you will need at least one month of time in order to acquire this card. Most banks are aware of this situation, and therefore, they offer bank accounts even without an alien residence card.
If you are opening an account without having an ARC, you will be subject to some of the restrictions that are set by the bank. For instance, you would need to visit a branch in person for being able to withdraw money.
Along with your ARC, you will be asked to present the following documents while opening an account in South Korea as a foreigner.
- Phone Number
On the basis of the reason for your visit to South Korea, you will also be asked to provide additional documentation such as a certificate of employment (for employees) or educational documents (for students).
Although the chances for your bank application to get rejected are less likely, there is a possibility for it to happen.
Fees and Minimum Deposits – The policies related to the fees and minimum deposits might differ depending on the bank that you choose.
However, most of the banks and financial institutions in South Korea will offer you bank accounts that are free of monthly fees. It is also possible for you to find a bank that does not have a requirement for minimum deposits.
Nonetheless, there will be a fee charged for making use of the ATM card, which also can be avoided by choosing to have special accounts. Withdrawal fee is common among all the banks while a person withdraws funds with the help of another bank’s ATM.
Anything that requires actual labor will result in service charges in the banks of South Korea. For example, if you go to a bank teller and ask them to make a transfer, you will be charged a small amount as a service fee.
Additionally, online transactions also incur a small fee, which might less than what you would have to pay when opted for approaching a bank to do so.
Card – A bank card will be offered to you on the same day on which you opened an account. Sometimes, it may be provided to you even before you actually leave the bank.
After the card is provided, you will be required to set a pin for that card, which will be asked during withdrawals at an ATM or while using online banking services. A passbook is also given to you for keeping a record of all your bank transactions.
English is a language, which is most commonly spoken in almost all the places of South Korea. However, language support is limited when it comes to mobile applications.
In general, all of your bank transactions can be accessed with the help of a mobile application, but the services will be limited. The main purpose of a bank card is to withdraw money from an ATM, and it cannot be used to make any purchases with your bank account.
Online Banking – As we have discussed already, online banking features might be limited as the English support in apps is not yet fully supported. To deal with this issue, you can opt for an international bank having a branch in South Korea.
Along with the card, online banking services will also be activated on the same day you opened an account. If you have any trouble regarding the process of registering with online banking services, the teller at a bank will help you.
Finally, as we said already, bank accounts can be opened without having to approach a bank, if you already have a bank account at an international bank that has branches existing in South Korea.
Types of accounts – Basically, there is an availability of a wide range of accounts, which are offered to non-residents and citizens alike.
The working procedure of savings accounts in South Korea is the same as it is in most other countries in the world. For the money that has been deposited by the customer, the bank provides returns in the form of interest.
For people who go for a longer-term commitment, the interest rate would be higher than usual. The overall average interest rates for savings accounts in South Korea vary between 2% to 4%.
- Time Deposit
A Time Deposit account in South Korea works similarly to a checking account. While some banks do offer interest on the funds deposited within a time deposit account, the interest might be low when compared to savings accounts.
However, if a person keeps their funds in a time deposit account for a longer period, then he or she might get higher interest rates.
Installment accounts are something similar to a savings account in South Korea. The person would be required to pay a monthly installment to the bank, which upon maturity will have a profit in the form of interest.
It is more similar to that of a certificate of deposit, but the money isn’t needed to be paid upfront. Instead, the money can be deposited by the customer in monthly installments.
Depending on the account and the bank that you choose, you can even get tax benefits, mostly when you are considered a resident of South Korea.
Banking as a foreigner – Opening a bank account in South Korea is very easy, whether it is for a resident or a foreigner. There are around 19 banks in South Korea, out of which, 4 banks control 70% of the banking industry. These are
- Kookmin Bank
- Shinhan Bank
- Woori Bank
- Hana Bank
Except for Woori bank, the other three banks have an excellent reputation when it comes to dealing with foreigners and has non-residents as the majority of the customers.
Therefore, we will have a look at the savings rates offered by the top 5 banks for expats as well as the top 5 international banks in South Korea. Before that, let us take a minute and have a look at what the top 5 banks in both categories are.
Top Banks for Expats:
- Kookmin Bank
- Standard Chartered Bank Korea
- Hana Bank
- Woori Bank
Top International Banks:
- Deutsche Bank
- DBS Bank
Best Savings Rates in South Korea:
Given below are the interest rates for savings accounts, which are offered by the banks that are considered to be best for foreigners. Please note that some of the details might be related to the resident individuals.
- Kookmin Bank – min: 1% and max 1.7%
Kookmin Bank is among the topmost banks available in South Korea. As for having an account that is beneficial to foreigners, Kookmin bank offers a bank account called KB Welcome Plus Installment Savings.
This account can be opened by an individual by depositing at least KRW 100,000. The maximum amount that can be deposited in this account is KRW 3 million per month.
The tenure for these accounts is 6 months and 12 months, where the individual is required to pay an installment on a monthly basis or daily basis.
The interest rate differs on the basis of the tenure chosen such as 1% to 1.5% for 6 months and 1.2% to 1.7% for 12 months, which includes the preferential interest for the people who chose the bank’s package product for foreign customers.
Upon the successful completion of the maturity period, the amount will be remitted into the overseas account of the individual, which makes it a bit more convenient for non-residents if they are not in Korea by that time.
- Standard Chartered Bank Korea
Most of the accounts offered by Standard Chartered Bank Korea are subject to taxes, which have a normal tax rate of 15.4% applicable to the interest earned.
Let us have a look at the various type of savings accounts and the interest rates offered with those account at Standard Chartered Bank Korea.
- SC Happy Savings:
This account comes with a tenure of 1 year and the contract interest rate for a 1-year deposit made in an SC Happy Savings Account is 3.30%.
- Mobile Preferential Installment:
There is an availability of 2 tenures for the people who choose this, i.e., 1 year and 2 years. For 1 year, the interest rate is 2.50%, while it is 2.60% for 2 years of tenure.
- Reformed Savings Passbook:
For Reformed Savings Passbook, there are 3 tenures, and the contract interest rate might differ from the annual rate of return.
For 1 year, the contract interest rate and the annual rate of return are 2.10%.
For 3 years, the contract interest rate is 2.20%, and the annual rate of return is 2.17%.
For 5 years, the contract interest rate is 2.30%, and the annual rate of return is 2.24%.
- First Household Savings:
There is an availability of various term periods for the people who want to deposit in this savings product.
For a period of 6 months to less than 12 months, the contract interest rate and the annual rate of return are 1%
For a period of 12 months to less than 24 months, the contract interest rate and the annual rate of return are 1.30%
For a period of 24 months to less than 36 months, the contract rate is 1.40% and the annual rate of return is 1.39%.
For a period of 36 months to 60 months, the contract interest rate is 1.45% and the annual rate of return is 1.44%.
- Dodream Savings:
This account also comes with the flexibility of making a deposit based on the tenure that is suitable for the customer’s needs.
For a period of 6 months to less than 12 months, the contract interest rate and the annual rate of return are 0.90%
For a period of 12 months to less than 36 months, the contract interest rate and the annual rate of return are 1.10%
For a period of 36 months to 60 months, the contract interest rate is 1.20% and the annual rate of return is 1.19%.
- Hana Bank – 2.9%
Hana Bank offers a wide range of products related to banking, out of which we will discuss a few.
- Easy-One Pack Savings Account:
This is an account, which is also considered to be the foreigner personal account offered by Hana Bank. The enrollment period for this account is 1 year and the individual is required to make a deposit of at least KRW 10,000.
The interest rate before taxes and after the maturity if completed will be 2.9% per annum. A preferential interest rate of 0.3% will be added to the above-mentioned interest rate when a person meets certain eligibility criteria.
- The Wide Foreign Currency Savings Account:
The interest rate for this account will depend on the rates posted by the bank during the time of opening an account. A preferential interest rate of 0.3% will be added to the above-mentioned interest rate when a person meets certain eligibility criteria.
The term period will range between 6 – 24 months, and this type of account is an installment account offered by Hana bank. The installments can be made regardless of the amount, date, or frequency.
This account is available in 8 currencies and offers a feature of split withdrawals as well.
- Foreign Currency Deposit Account:
The interest rates for this account will vary on the basis of the interest rates announced by the bank on a daily basis, with respect to the type of currency that has been chosen.
There is no term of maturity and customers can make any number of deposits or withdrawals by using 27 different types of currencies.
- Woori Bank – 1.95% to 2.15%
Woori Bank offers a wide range of banking products, out of which, we will be focusing on one of the main types of account namely ‘Woori We’ll Rich 100 Savings’.
The term period ranges between 1 year, 2 years & 3 years, and the limit for re-deposit is around 9 years. The primary objective of this account is to let individuals get prepared by saving money towards their retirement.
The basic interest rate is announced at the branch or the internet banking homepage during the bank account opening date. A preferential interest rate of 0.2% will be added to the above-mentioned interest rate when a person meets certain eligibility criteria.
The interest rates for this account are on the basis of the term selected, i.e., 1.95% for 1 year, 2.05% for 2 years, and finally 2.15% for 3 years.
If the customer does not withdraw their funds, the principal and the interest would again be reinvested for another two 3-year periods.
If you choose a savings product offered by an international bank having a branch in Korea, you might even get higher interest rates.
However, if you want to choose between the banks of South Korea, the banks mentioned above are the best, especially when it comes to expats.
There may be an availability of other banks, which might offer a higher interest rate when compared to the savings rates that we have discussed here. But these banks are discussed on the basis of finding a bank that is suitable for a foreigner in South Korea.
We hope that you were able to find this information useful and we wish that you get all your banking needs fulfilled while living in South Korea.
That being said, if you need services related to permanent residency or a second passport, we are here to help you. Additionally, if you are looking for financial solutions, whether it is investment advice or a wealth management service, you can get the best-in-class services by clicking here.
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