The average interest rate on term deposits, which was over 4% a year ago, has fallen to 3%. This is because market interest rates are falling as the base rate is expected to be lowered. In the first financial sector (banks), it is difficult to find term deposit products that offer interest rates higher than the base rate (3.5% per year). Savings banks, which had been refraining from competition for deposits in order to manage soundness due to the aftermath of bad real estate project financing (PF) loans, have only recently begun raising interest rates. Before the base rate goes down, it is necessary to keep an eye on term deposit products that offer relatively high interest rates.

According to the financial sector on the 24th, major savings banks recently raised their deposit interest rates. SBI Savings Bank raised the interest rate of its 'Cider Deposit and Withdrawal Account' from 2.9% to 3.2% per annum, up 0.3% points. OSB Savings Bank offered 3.7% per annum, up 0.1% points. Some OSB Savings Bank branches are offering interest rates up to 3.9% per annum. Acuon Savings Bank raised the interest rate of its '3-UP (Up) Regular Deposit' from 3.55% to 3.85% per annum, and HB Savings Bank raised the interest rate of its 'e-Regular Deposit' from 3.7% to 3.8% per annum.

The savings bank's interest rate hike is a move to resume operations after suspending new lending due to the aftermath of the real estate PF loan default. As savings banks reduced lending this year to manage soundness, their deposits also decreased. The deposit balance of mutual savings banks at the end of the first half of this year was 98 trillion won, which has decreased for 19 consecutive months since January of last year. As expectations of a base rate cut grow, savings banks are analyzed to be raising deposit rates to secure funds in order to expand their lending operations.

Woori Savings Bank has launched a 3.95% annual interest rate regular deposit product. If you sign up for this product with 10 million won, you can receive 334,170 won in after-tax interest after one year. This product can only be signed up for online. Sangsangin Savings Bank, OSB Savings Bank, and Cheongju Savings Bank also offer regular deposit interest rates of 3.9% per annum.

If you download the Savings Bank Central Association SB Talk Talk Plus application (app), you can sign up for non-face-to-face products at savings banks nationwide. With this app, you can sign up for savings and deposit products at various places without having to open a deposit/withdrawal account at each savings bank. Some savings bank term deposit products can only be signed up for in person, so you need to check. Savings banks are protected up to 50 million won under the Depositor Protection Act.

Individual branches of mutual finance companies such as Saemaul Geumgo and Shinhyup are also offering relatively high interest rates. According to My Bank, Garak Saemaul Geumgo has introduced a 4% annual regular deposit product. This product is available only through in-person subscription. If you deposit 10 million won for one year, you will receive 338,400 won in interest after tax. Some Shinhyup branches have introduced a 3.91% annual deposit product.

Mutual finance protects deposits of up to 50 million won per branch. However, branches belonging to the same head office are not protected separately and are protected up to a combined 50 million won, so it is a good idea to check in advance.

Reporter Jo Mi-hyeon mwise@hankyung.com