The importance of finance to an immigrant cannot be overemphasized. Whether one has clinched employment there, is there on vacation, schooling, or is applying for a Korean credit card, financial transactions are inevitable. And so bank accounts, though not evil, are quite necessary. Bank accounts are indispensable if one wants to save money and make payments. And if you're working for an establishment? Your salary would of course be paid through your bank account.
One cannot successfully run his/her personal everyday life affairs without an elaborate financial scheme, and in this modern-day age, such a scheme must include a bank account.
As the name implies, a bank savings account is a bank-operated account created with the sole aim of keeping money safe. There are 150 authorized banks in Korea, of which 59 are commercial, 12 specialized, and 79 mutual savings. The positives of having a savings account in Korea make access to one's finances easier, especially via ATM cards (bank cards), and circumvent the charging of additional fees. Some of the drawbacks to creating one includes the low-interest rates provided offered, where they may be better offers in other investment options, like stock trading. Deposit accounts score more points on this scale, as they offer higher interest rates than their savings account counterparts. Also, compared to other countries of the world, banks in Korea have very limited working hours, in most cases, they are only open from 9 am to 4 pm. And not just the banks, the ATMs as well, with major ATMs being unavailable and inaccessible during late hours of the day.
How to Create a Bank Account in Korea
The first thing you should know about creating a bank account in Korea is the fact that you cannot create one online. Such provision is not available. Thus, you must visit the bank in person. Luckily, there is no need for a proper appointment. The only way you can open an account online is if you bank with an international bank that has branches in Korea.
The downside of this in-person requirement for foreigners is the fact that Korean bank employees who are English speakers are not ubiquitous. You may find them only in banks of urban areas such as Seoul and Busan. You may have to get your translator (a Korean person) to accompany you to the bank. There are various agencies available to cater to foreigners' translator needs. The Dasan Hotline, for example, can be reached by dialing 120, or you can contact the Korean Tourism line on 1330.
What are the requirements for operating a bank account in Korea?
Just like how it is in other countries of the world, there are specific requirements needed by the bank to open an account for you. Some of these are:
1. The Alien Residence Card (ARC): The ARC is like a key to the lock of some of the restrictions to foreigners while banking in Korea. The Alien Residence Card allows you to exercise various functions, such as online banking, which would be impossible otherwise (except for international banks), or the customer wishes to transfer money overseas. Since banks are aware that this card is difficult to acquire, as it may take as long as a month or two after your arrival before you can get it, many banks would provide you with a bank account without it. However, if you are opening an account under this exception (without the ARC), you'll be subject to some restrictions such as making in-person visits to the bank to withdraw. For short-term visits, such as for educational purposes, you may not be granted an ARC.
2. Passport photograph
3. Travel Visa
4. Phone number, preferably not an international number
5. Certificate of employment or educational documents, depending on what basis you are visiting Korea: either you are an employee for an establishment or a foreign student studying in Korea. This is the proof for both
Other essentials
1. Deposits (Fee and minimum): The deposits charged vary from bank to bank. A greater percentage, however, would not offer savings bank accounts encumbered by monthly fees, or even require their customers to deposit minimum amounts. There are fees however from the use of your bank or ATM card. Also, when you withdraw money from another bank's ATM, a withdrawal fee is charged. There may also be service charges to your bank's employees when it comes to the rendering of labor.
2. Bank cards: Bank cards can only be used to withdraw money from ATM machines. They cannot be used as debit or credit cards to make purchases. You get your bank card the day you open your account. You are required to set a password (pin) for the card, and you are also given a passbook where you are expected to keep records of the transactions you make for/with the bank.
3. Digital certificate: The digital certificate is an identification file that enables one to send money from one's account. It is especially necessary for online transfers and is collected upon opening the account. The file may be saved to any of one's internet devices such as a smartphone or a USB. If your digital certificate is missing, report it to the bank.
To Make Transfers to Other Countries
To be able to make international transfers from Korea, a foreigner would need to choose a Foreign Designated Bank. A foreigner should also inquire from his/her bank the limit to his/her transfers per day or per month, and the bank's exchange rate. Worthy of note also is that your bank account application may be rejected, though this is not common. The bank may also make you wait for a while before granting your application to a fully functional account.
Savings Accounts In Korea
Photo Credits: Institute for Basic Science
Savings accounts operate the same way as it does in most countries. The bank offers an interest rate for the deposited money, a rate that increases the longer the money is left in the bank. The average interest rate of all banks in Korea ranges between 2% and 4%. There are about 19 banks in South Korea, with a major 4 controlling a whopping 70% of the banking industry.
The four major banks are:
1. Kookmin bank
2. Shinhan Bank
3. Woori Bank
4. Hana Bank
Kookmin Bank, Shinhan Bank, and Hana Bank are popular for their foreign customer service and boast of a bulk of their customers being non-residents.
1. Kookmin Bank (KB)
Kookmin bank is one of the most popular banks for foreigners. They have over 1200 branches and ATM stands in equal measure. An account may be opened by depositing a minimum of 100,000 Korean Won (KRW) and a maximum of 3 million KRW may be deposited afterward.
The tenure of a Kookmin account (the time allocated for the saved money's maturity) is about 6 months and 12 months. The customer is expected to pay into the account in installments, either per month or daily. The payable interest rate on the money saved depends on the tenure subscribed to by the customer. If it is the 6 months tenure, then the interest rate would be 1% to 1.5%. If it is a 12 month-tenure, then it would be between 1.2% to 1. 7%. When the tenure of the account has expired, then the money would be paid into the customer's foreign account. This is especially favorable to foreigners who are not residing in the country at the time of maturity.
2. Standard Chartered Bank of Korea
Another top bank for foreigners in Korea, the accounts of the Standard Chartered Bank of Korea are controlled by tax rates of 15.4%.
Accounts offered by the SCBK:
S.C Happy Savings: Accounts at S.C Happy Savings have a tenure of 1 year, and an interest rate of 3.30%.
Mobile Preferential Installment: The accounts may have a tenure of 1 or 2 years. For the 1 year tenure, the interest rate is 2.50%, while the 2-year tenure is 2.60%.
Reformed Savings Passbook: For the accounts with a year tenure, the interest rate is about 2.10%. For a 3 year tenure, the rate is 2.20%, and for a 5-year tenure, the rate is 2.30%.
First Household Savings: For a tenure of 6 months to 12 months, the interest rate is 1%.
12 months to less than 24 months = 1.30%.
24 months to less than 36 = 1.4%.
36 months to 60 months = 1.45%.
3. Hana Bank
Hana bank, with a web of over 40 branches and great foreign customer service offers a variety of services including:
A one-pack savings account, which the bank considers to be a foreign personal account. The customer makes a minimum deposit of 10,000 KRW. On the fulfillment of the criteria given by this package, including taxes, the interest rate for the saved amount on maturity is 3.2%. However, without all of these criteria fulfilled, the interest rate is 2.9%.
Wide foreign currency savings account: For this account, the interest rate offered by the bank depends on the rates offered at the time of creating an account, and not the tenure of the account. Additional interest may be added upon fulfillment of the other criteria needed. The tenure of the account ranges from 6 to 24 months, and as the name suggests, they deal in as many as eight currencies.
Foreign Currency Deposit Account: Similar to the wide currency savings account, the foreign currency deposit account does not determine its interest rate on the tenure of the savings but is based on what the bank announces daily. There is no fixed term of maturity as customers may make an infinite number of deposits or withdrawals. They also deal in multiple currencies.
You may contact the bank through their main site or English site
4. Woori Bank
Woori Bank's primary goal is to assist its customers to save money in anticipation of their retirement. The term period varies from 1, 2, or 3 years with a limit of redeposit of 9 years. The interest rates offered are published on the bank's internet homepage, the same day the customer opens an account. When the customer meets certain criteria, an interest rate of 0.2 will be added.
Contact the bank via the main site or their English site.
International banks may offer higher interest rates than local savings banks. Some of the top international banks are:
1. HSBC.
2. Citibank.
3. Deutsch Bank.
4. DBS Bank.
Savings Accounts for Multi-cultural families
For multicultural families, there are special provisions made for members of such families, especially if the wife/woman is an immigrant. There are no elaborate provisions for immigrant husbands to Korean wives/women. These aforementioned banks have their provisions for multicultural families. For example, The Kookmin Happy Savings is a special account available to a foreign woman married to a Korean man. The tenure is one year and the interest rate is 4.5% on initial deposits and on completion of the deposits, 3% is added. Also, The special Woori Hope Dream Savings is for either the wife or husband of a multicultural marriage with an interest rate of 7.5%.
The Cheerful gift savings of the Korea Exchange Bank also provides financial services for members of multicultural families, even children. It offers an interest rate of 5% on completion for an account with a duration of one year, 5.5% for a two-year tenure, and 6% for a three-year tenure.
The New Hope Savings of the Shinhan Bank is especially for the immigrant in a multicultural marriage. It boasts of an interest rate of 5.5%. However, if the account closes before three years, the interest paid will be reduced.
To open an account for a multicultural family, the essentials are the same, save for the presentation of a copy of the family register which would confirm marriage to a Korean national.
South Korea is distinguished for its favorable expatriate treatment, especially its provision for employment opportunities and decent salaries, though this is without its own downside as accompanying these salaries are heavy taxation schemes, especially personal tax income. In fact, apart from the personal income tax which may range from 6 to 45% of one's total income, there is also a resident's tax that culminates to 10% of the income tax. Some foreigners are exempted from these taxes though, especially those employed in public schools and foreign specialists in engineering. All foreigners are to contribute a quota of their salaries to the National Pension Scheme. The pension and the taxes may be reobtained when their stay in Korea comes to an end.
For immigrants moving into Korea for any of the reasons aforementioned, there is no doubt that prior knowledge of these particulars of banking, finance, and taxation is fundamental to adequately manage one's finances for as long as one's stay in the country.
