More than 70% of individual savings accounts 'empty'

By Nam Hyun-woo

More than 70 percent of individual savings accounts (ISAs) opened at banks have balances of less than 10,000 won, casting doubts on the effectiveness of a range of newly introduced financial products, ambitiously introduced by the government to “increase public wealth.”

According to Financial Supervisory Service data submitted to rep. Min Byung-doo of the Minjoo Party of Korea, some 1.37 million ISAs were opened at banks between March 14 and April 15. However, some 74.3 percent or 1.01 million of them were opened with balances lower than 10,000 won.

Some 28,000 or 2.0 percent of at-bank ISAs were found to have less than 100 won, with their aggregated amount standing at a mere 1.5 million won.

The number of ISAs having more than 10 million won was some 22,000, accounting for 1.6 percent of the total, even fewer than those with less than 100 won.

This seems to show that a significant number of customers opened ISAs as favors to their acquaintances working at banks. Since one person can open only one ISA, banks have fiercely competed to garner more customers. Bank workers, forced to meet a certain ISA quota, asked their acquaintances to open an ISA at the bank they are working for.

Among the banks, Nonghyup had the lowest average amount, hovering at around 100,000 won.

“After the excessive competition between financial institutions, there are too many ‘empty ISAs,’” said Min.

An ISA is a type of savings account where tax is not collected from interest earned or gains from investments up to a set amount. Various types of other financial products are also attached to the account.