Fixed deposits vs installment savings in Korea
Korean banks sell two main products. A fixed deposit (예금, yegeum) takes one lump sum and keeps all of it earning interest until maturity. An installment savings account (적금, jeokgeum) takes a fixed amount every month, so the first payment earns n months of interest and the last payment earns just one. That is why a 12-month jeokgeum earns only a little more than half the interest of a deposit of the same total amount, even at the same advertised rate.
| Product | Simple interest | Monthly compound |
|---|---|---|
| Deposit (예금) | P × rate × months/12 |
P × ((1 + rate/12)^months − 1) |
| Savings (적금) | M × rate/12 × n(n+1)/2 |
M × Σ((1 + rate/12)^k − 1) |
Bank products may pay simple interest (단리) or monthly compound interest (월복리); compounding adds a little more over long terms. Check which one your product uses and pick it in the calculator.
The 15.4% interest income tax
Interest paid by a Korean bank has 15.4% withheld at source: 14% national income tax plus 1.4% local income tax. So ₩100,000 of interest before tax becomes ₩84,600 in your account. If your product is tax-free, switch the tax setting to 0%.
Why your bank’s figure may differ
- Banks may accrue interest daily and round down fractions of a won.
- Missing the conditions for a bonus rate, or closing the account early, means a lower rate applies.
- Late monthly payments on a savings account reduce the interest at maturity.
Check your product terms for the exact amount. To convert your payout into another currency, use the exchange rate calculator; to compare with a loan, try the loan repayment calculator.