"If I put ₩300,000 a month into a 4% savings plan, what do I get at maturity?" The advertised rate is misleading. Interest is taxed 15.4%, and with an installment plan each deposit earns interest for a different length of time — so real interest is often about half the headline rate. See your after-tax payout instantly.
Calculates automatically. An installment plan's deposits are held for different lengths of time; a lump-sum deposit is held for the full term. This estimate applies Korea's interest-income tax (standard 15.4%). Actual rates and interest methods vary by product.
Why interest is less than the headline rate (the installment trap)
Put ₩300,000 a month into a 4% installment plan for a year and the principal is ₩3,600,000 — but the pre-tax interest is only about ₩78,000. You might expect ₩144,000, but the first month's deposit earns 12 months of interest while the last month's earns just one. On average the money sits for only half the term, so interest is roughly halved.
Add the 15.4% interest tax and your take-home interest shrinks further. The calculator above reflects both to show your after-tax payout.
Installment vs. lump-sum deposit
- Installment — deposited in monthly pieces, each held for a different span. So at the same rate and total, it earns less interest than a lump-sum deposit.
- Lump-sum deposit — held in full for the whole term, so interest accrues fully. If you already have a lump sum, a deposit beats an installment plan.
FAQ
What is the 15.4% interest tax?
14% income tax + 1.4% local tax, withheld automatically from interest. Some products (ISA, certain tax-free savings) offer exemptions or lower rates.
Who gets the 9.5% preferential rate?
Members' deposits at credit unions (Saemaul Geumgo, Shinhyup), up to ₩30M per person, get this lower rate. Check eligibility and limits with the institution.
Simple or monthly compound?
Match the product's stated method. Most standard installment and time deposits are simple; only some are compound.
What if I close early?
A much lower early-termination rate applies, cutting interest sharply. Holding to maturity is key.
Installment interest is about half the headline rate, then minus 15.4% tax. Compare the "after-tax payout" to find the truly better product.
This is a general-information estimate. Actual payouts depend on the product's rate, interest method and tax treatment.
