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| A man is consulted about joining "Youth Leap," an installment savings product introduced by the government to aid the asset accumulation of young people, at a bank in downtown Seoul, Thursday. Newsis |
By Lee Yeon-woo
One out of four subscribers who joined the installment savings product introduced during the previous Moon Jae-in administration has closed their account, according to data from the Financial Supervisory Service (FSS).
The FSS data submitted to Rep. Kang Min-kuk of the ruling People Power Party showed that 684,878 subscribers have closed their accounts as of May. This is almost a quarter of the initial 2.89 million who subscribed when the product was introduced in February 2022.
The product, known as Youth Hope, gained enormous popularity among young adults due to its high annual interest rates. It aimed to aid the asset accumulation of young people aged between 19 and 34 who earned a total salary of 36 million won ($27,872) or less. It was designed to enjoy an annual interest of 10 percent if saves deposited up to 500,000 won every month for two years.
However, as economic conditions have worsened, more young people are opting to close their accounts even before their deposits mature.
In light of this, financial authorities are continuing discussions to find ways to prevent subscribers from closing another savings product, called Youth Leap, which was introduced this month by the current Yoon Suk Yeol administration.
"The maturity period for Youth Leap is five years in duration, three years longer than Youth Hope," said an official from the financial authorities. "We have commissioned research to devise strategies to encourage them to maintain their savings products."
"Youth Leap should take this situation as a cautionary example, and be managed in a way that it can genuinely assist in asset formation for struggling young people," Rep. Kang said.
As of Wednesday at 2 p.m., 394,000 people have applied for Youth Leap.
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