Before “time deposit or installment savings?” there is a question that splits earlier — the number printed as “best rate” is not the number you get.
1. How big is the gap. Of 37 time deposits on public disclosure, the 11 with no qualifying conditions average a 3.37% headline rate, while the 26 with conditions average 3.29% even with every condition met (our calculation). Meeting all the conditions lands below the starting point of a product that has none.
2. What is the catch. Miss the conditions and it drops to 2.63%. And with installment savings, money paid in later sits for less time — a 12-month plan is effectively 13/24 = 54.17% of the headline rate (our calculation), which is why a “4% plan” feels like half.
3. How do I choose. Read the headline rate first, not the best rate, and compare products with the preferential margin stripped out. The 15.4% withheld on interest is 14% income tax plus 10% of that in local income tax.
Can you trust the “best rate”
Each product lists a headline rate and a best rate (including preferential margin) side by side. Subtract one from the other and you get “how much the conditions are worth.” For 11 of the 37, that difference was zero.
| Category | Products | Average headline rate | Average best rate |
|---|---|---|---|
| No qualifying conditions | 11 | 3.37% | 3.37% (same) |
| With qualifying conditions | 26 | 2.63% | 3.29% |
— Korea Federation of Banks consumer portal, deposit rate comparison > time deposits (checked July 29, 2026; 37 products). Registered by the banks and collated by the federation. The averages and grouping are our own calculations from that table.
Read the two rows against each other.
Among products with conditions, meeting every one averages 3.29%.
Among products with no conditions at all, the headline rate averages 3.37%.
→ Working through every condition lands below simply picking a product that has none.
And failing the conditions drops you to 2.63%.
Is a bigger preferential margin better
| Product | Headline | Best | Margin |
|---|---|---|---|
| Jeju Bank J Time Deposit | 2.00% | 3.70% | +1.70pp |
| BNK Gyeongnam The Deundeun (Season 2) | 2.00% | 3.55% | +1.55pp |
| BNK Busan The Special | 2.20% | 3.55% | +1.35pp |
| Hana Time Deposit | 2.05% | 3.20% | +1.15pp |
| Jeonbuk JB Direct Deposit | 3.76% | 3.76% | 0 — “no conditions” |
| K Bank Code K Time Deposit | 3.71% | 3.71% | 0 — “no conditions” |
| KakaoBank Time Deposit | 3.60% | 3.60% | 0 — “without complicated conditions” |
The table splits cleanly. Products with margins above 1pp all start in the 2% range; products with no margin at all start at 3.6–3.76%. So a “preferential rate” is less an addition than a structure that lowers the headline rate and gives it back only to those who qualify.
The conditions column shows what they are — salary deposits, card spending, marketing consent, first-time customer, open banking sign-up, no new or closed account in the past 12 months. One product splits “up to 1.35pp” across six separate conditions. All of them have to be met to reach the best rate.
So what do you look at first
| Step | Do this | Why |
|---|---|---|
| ① Start from the headline rate | Cover the “best rate” column and rank on the headline | If you miss the conditions, the headline rate is your rate |
| ② Count the conditions | How many, and are they things you already do? | Salary deposits and card spending are free if already true |
| ③ Compare the two numbers | “headline of a no-condition product” vs “best rate of a conditional one” | The latter really can be lower |
| ④ Convert to after tax | Net of interest income tax | Rate comparisons are pre-tax |
| ⑤ Check the post-maturity rate | Disclosed separately for each product | See below |
Step ⑤ is the most-skipped column. Straight from the disclosures — “after maturity, 3 months: 50% of the headline rate / 6 months: 20% / beyond 6 months: 10%” (NH Nonghyup); “beyond 6 months: 0.10%” (Shinhan); “beyond 1 month after maturity: 0.01% a year” (Jeonbuk).
→ Once the term ends, interest effectively stops. A 3.7% product can become 0.01%. Doing anything at all on the maturity date is the surest return in this table.
Time deposit or installment — which, when
| Situation | Choose | Why |
|---|---|---|
| You already have the lump sum | Time deposit | Interest accrues on the whole amount for the whole term |
| You need to save monthly | Installment | The building stage — enforced saving |
| Chaining the two | Installment → deposit relay | Build a lump sum over a year, then place it on deposit |
“But the installment rate is higher” is an illusion. Because later payments sit for less time, the same rate yields less interest. Always compare after-tax payouts — switching type in the savings maturity calculator shows the gap immediately.
Headline rates alone flip the ranking, so here are the real yields on one axis.
Why is installment interest about half the headline rate
This article carried the note that “the structure certainly produces that result, but we could not confirm the exact multiple from a source, so it is stated only as an approximation.” It turns out this was never a sourcing problem — it is arithmetic. Take a 12-month plan with equal monthly deposits and count:
- The first payment sits for 12 months, the second for 11 … the last for 1 month
- Total: 12 + 11 + … + 1 = 78 month-units
- The same money in a lump-sum deposit would earn 12 × 12 = 144 month-units
- 78 ÷ 144 = 0.541666… = 13/24 = 54.17% (our calculation)
“About half” is right; precisely, it is 13/24. Generalised, an n-month plan yields (n+1) ÷ 2n of the headline rate (our calculation) —
6 months 58.33% · 12 months 54.17% · 24 months 52.08% · 36 months 51.39% · 60 months 50.83%
The longer the term, the closer to 50%. Short plans sit nearer the advertised rate; long plans converge on half.
A 4% 12-month installment plan is effectively 4% × 0.5417 = about 2.17%. The same money in a 2.5% time deposit does better (our calculation) — comparing headline rates alone reverses the ranking.
This assumes equal payments exactly one month apart, simple interest, no early termination. Real products vary with payment dates, daily proration and qualifying conditions.
How close to half depends on the term. Here it is from six months to five years.
Where does the 15.4% withheld on interest come from
The familiar 15.4% is not one rate but two provisions multiplied.
Income Tax Act, Article 129(1)1(d) — on other interest income, 14 per cent
Local Tax Act, Article 103-13(1) — an amount equal to 10 per cent of the income tax withheld shall be specially collected as individual local income tax
Applying them: 14% + (14% × 10%) = 14% + 1.4% = 15.4% (our calculation). The 1.4% is not a separate rate but “10% of the 14%,” and that also explains why it is absent from the NTS table — it is a local tax, not a national one.
Reading the provision turned up three exceptions (Art. 129(1)1) —
· (b) Non-business loan interest: 25 per cent. Interest on a private loan is taxed differently from deposit interest.
· The proviso to (b) — interest received through a registered online investment-linked finance provider (P2P) drops to 14 per cent.
· (c) Excess refunds from a workplace mutual aid association: the “basic rates” (the 6–45% progressive schedule), not 14%.
Deposit and installment interest falls under (d), “other interest income” — 14%.
Questions this raises
How much tax is taken from the interest?
Korea's National Tax Service withholding table reads “other interest income — 14%” (deposit and savings interest falls here). The commonly quoted 15.4% adds 1.4% local income tax — now confirmed from Article 103-13 of the Local Tax Act (see above). It does not appear in the NTS table because it is a local tax. The full comparison is in repay or invest.
Are internet-only banks better?
All three — K Bank, KakaoBank and Toss Bank — appear among the 11 no-condition products, each with a conditions column reading “none” or “a time deposit you can open without complicated conditions.” But commercial and regional banks also had no-condition products (Jeonbuk JB Direct at 3.76%, KDB at 3.35%, Woori WON Plus at 3.20%), and the single highest best rate belonged to a commercial bank. Look at the product structure, not the type of bank.
What is the deposit protection limit?
Not verified this round. The federation's disclosure covers rates and conditions only and does not address protection limits. Check with the Korea Deposit Insurance Corporation.
Will these rates hold?
This is a single point in time, July 29, 2026, and the per-product “last provided by bank” dates range across July 20–29. Look again right before opening an account. If you also carry a loan, run repay or invest first.
“Best rate” is the number you reach after satisfying every condition. And even at that number, you can end up below the headline rate of a product with no conditions at all. So cover the best-rate column and rank on the headline first.
Sources
- Korea Ministry of Government Legislation, National Law Information Centre — Income Tax Act, Article 129 (withholding rates). Source for subparagraph 1(d), “other interest income … 14 per cent,” and for (b) (25% on non-business loans, 14% via P2P) and (c) (basic rates on mutual-aid excess refunds).
- National Law Information Centre — Local Tax Act, Article 103-13. “10 per cent of the income tax withheld” — where the remaining 1.4% of 15.4% comes from.
- Korea Federation of Banks consumer portal (registered by the banks and collated by the federation — not agency source text) — Deposit rate comparison > deposit rates (time deposits, checked July 29, 2026; 37 products). Source for each product's headline and best rates, the wording of the qualifying conditions, the post-maturity rates, the opening channels, and the “last provided by bank” dates. The page states that the comparison data is registered and posted directly by each bank's disclosure officer. The 11/26 split and the averages (3.37% / 2.63% / 3.29%) are our own calculations.
- National Tax Service (Korea) — Filing Guide > Corporate Filing > Withholding Tax > Basic Information > Rates, the “residents and domestic corporations” withholding table. Source for “other interest income 14%.” Local income tax does not appear in that table.
Where to check further
- The maturity terms behind the disclosed rates. The table carries no maturity (12 or 36 months), so this article focuses on structure rather than individual rate levels — the product detail pages on the Federation of Banks portal give rates by maturity.
- What kind of average these are. 3.37%, 2.63% and 3.29% are unweighted product averages, not weighted by volume — the Bank of Korea ECOS deposit rate series publishes volume-weighted figures monthly.
- The same analysis for installment savings. This dataset covers time deposits only — the portal's installment savings tab lets you run the same headline-versus-best comparison.
Written as of July 2026. Product rates and conditions come from the Korea Federation of Banks disclosure (checked July 29, 2026), the 14% interest income tax rate from the National Tax Service withholding table, and the grouping and averages are our own calculations. The disclosure is updated continuously — look again before opening an account. For after-tax payouts see the savings maturity calculator; for the tax on interest, repay or invest. This is general information, not investment advice.
