The 'Youth Future Savings Account,' designed to support asset formation for young people, will be available next month through 15 financial institutions. The maximum interest rate is expected to range from 7% to 8% depending on the institution.
On May 14, the Financial Services Commission held an event titled 'The First Step to Filling the Future: Unboxing Talk Concert for Youth Future Savings' at the Small Business Market Promotion Corporation's dedicated training center in Seoul, where it announced the participating institutions and interest rates for the Youth Future Savings Account. This policy financial product combines government contributions with tax-exempt interest income to assist young people in building their initial assets.
The participating institutions include major banks such as KB, Shinhan, Woori, Hana, and NH Bank, along with iM Bank and regional banks like Busan, Gyeongnam, Gwangju, and Jeonbuk. New entrants to the program include Suhyup Bank, KakaoBank, Toss Bank, and Korea Post, bringing the total to 15 institutions.
The account features a fixed interest rate for three years, starting with a base rate of 5%, plus an additional preferential rate of 2% to 3% depending on the institution. Consequently, the maximum interest rate is projected to be between 7% and 8%. All participating institutions will offer a common preferential rate of 0.5 percentage points for young people with an annual income of 36 million won or less, and an additional 0.2 percentage points for those who complete the 'Financial Counseling for All Youth' program.
Considering the government contributions and tax benefits, the effective yield is expected to be even higher. The Financial Services Commission explained that if a participant contributes 500,000 won monthly for three years, they could receive between 21.1 million and 21.38 million won for the standard account, and between 22.27 million and 22.55 million won for the preferential account. This is comparable to the effects of joining a standard savings account with an annual simple interest rate of 13.2% to 14.4%, or a preferential account with rates of 18.2% to 19.4%.
The commission also announced improvements to the program. To ensure that young couples who are married are not excluded due to household income criteria, the income requirements will be relaxed for two-person households consisting of the account holder and their spouse. The threshold for the standard account will increase from 200% to 250% of the median income, while the preferential account will rise from 150% to 200%.
Additionally, a credit score incentive will be implemented. Young people who maintain their Youth Future Savings Account for more than two years and contribute over 8 million won will receive a credit score boost of 5 to 10 points. If they switch from the Youth Leap Account, the duration and contributions from the previous account will also be considered.
* This article has been translated by AI.
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