Emergency Fund Parking Accounts: 5 Compared

What to look at in an emergency savings account

Emergency savings serve a different purpose from money waiting to be invested or from a lump sum. Being able to take it out the moment you need it matters more than earning a little extra. A parking account is the account that keeps that condition while still paying interest for the days you do not use the money.

Does it accrue from a single day

Parking accounts usually calculate interest daily. There is no early-termination rate for failing to complete an agreed term, as there is with a time deposit.

Holding 3 million KRW at 4.00% per year for one day gives about 277 KRW after tax, and about 69 KRW at 1.00% per year. A single day is a small amount, but if you leave emergency savings untouched for months those daily amounts keep adding up.

Can you meet the preferential conditions

Many products attach conditions next to the headline rate. Conditions split into those you clear once at signup and those that require monthly activity. The second kind drops the preferential rate for any month you skip.

Conditions cleared at signup are things like first-time customer status or marketing consent. Once handled, there is nothing further to attend to. Monthly conditions are things like card spending or automatic transfers that need checking every month.

I once opened an account looking at the headline rate, failed to meet the conditions and received only the base rate. Emergency savings are money you set aside and forget, which does not sit well with conditions that need monthly attention. Spending on a card you would not otherwise use, just to qualify, can cost more than the preferential rate is worth.

Does it run into a deposit band

It is easy to assume the same rate applies to everything in the account, but many products change the rate by balance band. At the size of typical emergency savings, however, the money usually sits inside the first band, so this does not apply. In that band the rate carries straight through to the result.

How it differs from an everyday account

Both allow money in and out without restriction. What differs is the rate. Accounts used for salary deposits and card payments are often set at a low rate, while parking accounts are designed to pay a rate on the balance you leave in them.

So if you mix money you spend with money you park in the same account, the parked money earns the lower rate. That is the reason for separating the accounts.

Is it covered by depositor protection

A bank demand deposit is covered. The limit is 100 million KRW per person per financial institution, covering principal and interest combined. Savings bank deposits fall under the same limit.

A securities firm CMA is not covered, despite the similar name. Emergency savings are money whose principal must not fall, so check this distinction first.

Five products compared

Only the rates that actually apply at emergency savings size (10 million KRW or less) are listed. Above 50 million KRW the rates differ by product.

씨드모아 comes in two tiers by amount, and emergency savings fall under the small-balance tier. Its preferential band covers 50 million KRW or less, so even a few million KRW qualifies.

SBI저축은행 사이다입출금통장 pays 2.70% per year up to 100 million KRW with no preferential conditions. With nothing to keep up with, it suits money you set aside and forget.

케이뱅크 플러스박스 pays 2.20% per year on the portion above 50 million KRW, so at emergency savings size the applicable rate is 1.70% per year. 카카오뱅크 세이프박스 runs at a single 1.60% per year up to 100 million KRW, so there is no amount to keep track of. 토스뱅크 통장 pays 1.00% per year with no conditions.

Interest you actually receive, by amount and period

Emergency savings have neither a set amount nor a set period. The figures below are split across three amounts and three periods.

Interest before tax is the principal multiplied by the annual rate, multiplied by the number of days held, divided by 365. Interest income tax of 15.4% is then deducted. That rate is 14% income tax plus 1.4% local income tax.

The calculation stops at three months because 씨드모아’s maximum 4.00% per year applies for three months after opening. For money held longer, the base rate that follows the preferential period has to be included in a fresh calculation.

It is easy to think of emergency savings as money you do not hold for long, but in practice it often sits untouched for months. Over one month the difference is a few thousand won and easy to pass over; over three months the amount becomes visible.

Conditions that matter more for emergency savings

Can you withdraw immediately

The situations that call for emergency savings are usually urgent. A parking account is a demand deposit with no restrictions, and interest is calculated for the days held up to the withdrawal. There is no separate early-termination rate as with a time deposit.

When interest arrives

Some products pay interest daily and some once a month. Where the interest paid is added to the balance, that interest can go on to earn interest itself.

The tables above exclude that compounding effect and use only principal, rate and holding period. Actual receipts vary slightly with each product’s payment schedule.

With emergency savings you may take part of the money out or top it back up. In that case, check when interest is paid and how it is calculated on the remaining balance after a withdrawal.

Should it be separate from your everyday account

Mixing emergency savings into a salary account blurs how much of it is emergency savings. 카카오뱅크 세이프박스 creates a safe inside the account, so you can separate the money without moving it. The other products use a separate account.

Will it exceed depositor protection

At emergency savings size the limit is rarely an issue. That said, existing deposits or installment savings at the same bank are counted together. The limit is 100 million KRW per financial institution, principal and interest combined.

How much to set aside

The basis for setting the amount differs from person to person, because what suddenly needs paying differs from person to person. Some expenses end in the hundreds of thousands of won, such as medical bills or car repairs, and some take millions at once, such as a move or a deposit. Which of the two you are preparing for decides the amount.

What the calculation does show is this. In the tables, the difference between 3 million KRW and 10 million KRW is larger than the difference the rate makes.

At the same 4.00% per year over three months, 3 million KRW gives 25,588 KRW and 10 million KRW gives 85,295 KRW. Splitting 3 million KRW between 4.00% and 1.00% per year, by contrast, differs by 19,191 KRW. Raising the amount moves the result more than raising the rate.

So the order runs like this. Decide the amount to set aside as emergency savings first, then choose the product that fits it. Choosing the product first and fitting the amount to it reverses the order.

Broken down by band

Around 3 million KRW runs into no band conditions with any of the products. The rate carries straight through, so a product with simple conditions works.

5 million to 10 million KRW widens the gap into tens of thousands of won. A product whose preferential conditions are cleared once and then left alone is easier to manage.

Above 10 million KRW is less emergency savings than short-term spare cash. From this band you have to look at the rates by deposit band separately.

Before you open an account

Check what kind of preferential conditions apply. They split between conditions cleared once at signup and conditions requiring monthly activity. Emergency savings are money you set aside and forget, so the first kind fits.

Check how long the preferential rate applies. If the period is fixed, include the rate that follows to see what you actually earn.

Quoted rates are before tax. Because 15.4% is withheld when interest is paid, you do not receive the advertised rate as it stands.

Check when you can receive interest. Some products pay daily and some on a set date each month. A different payment date does not mean interest for a period you withdrew in disappears, so check how interest is actually calculated as well.

Check whether it is counted with existing deposits. Depositor protection is counted per financial institution, and different branches of the same bank count as one place.

Frequently asked questions