SEOUL, KOREA - As the era of low interest rates continues, the number of people who put their money in one-year time deposit accounts is on the rise. Thanks to this trend, the balance of time deposit accounts has increased more than 11 trillion won this year to date.
According to the Bank of Korea on May 26, the time deposit balance as of the end of April was 555,187.1 billion won, up 2.0 percent (11,1009 billion won) from 544,086.2 billion won at the end of 2013. For the whole year of 2013, the deposit balance declined by 12,352.4 billion won. For the four-month period this year, the balance lost last year was almost regained.
A commercial bank official said, "Deposit interest rates have been at historic-low levels and the spread between longer-term deposits over one year and shorter-term ones below one year is narrowing. Given there is not much choice to park their money, with expectations that interest rates may rise sooner or later, people tend to open time deposit accounts with terms shorter than one year as a temporary measure."
For example, the average interest rate for one-year time deposit fell 0.04 percentage point to 2.72 percent in March this year from 2.76 percent in October last year. In contrast, the average six-month deposit rate in March was 2.44 percent with little change from five months ago. The spread has narrowed to 0.28 percentage point from 0.32 point.
Due to this, the share of short-term time deposit account balance less than one year in total has increased to 25.4 percent in March from 23.3 percent a year ago. During the same time, as much as 12 trillion won funds have been transferred to short-term deposit accounts.
저작권자 © Korea IT Times 무단전재 및 재배포 금지
