Types of bank accounts
There are several different types of bank accounts available to citizens and foreigners alike. Most accounts do not require a minimum balance nor do they charge any fees to maintain one.
These accounts work the same in South Korea as in most other countries. The client deposits money at the rate he/she desires and the bank offers interest as an incentive to save. Generally, the longer the term of commitment, the higher the interest rate will be. For shorter term accounts, the interest rates are fairly low for savings accounts (about 2%-4%).
A time deposit account works more like a checking account. Some banks do offer interest on time deposits, but they are generally lower than savings accounts because the interest depends on the length of time you intend to keep your account.
This account requires the client to make monthly instalments/payments to the bank for interest. At maturity, the client will have made a profit. This works like a Certificate of Deposit, except the money does not have to be paid upfront, but in monthly deposits.
After signing up for an account, you will receive a bankbook to record your transactions and a bank card within a couple of weeks. The bank card is strictly an ATM card to withdraw money from any ATM machine. It cannot be used to charge purchases to your account.
Services, fees & interest
The beauty about most Korean bank accounts is the lack of service fees that they charge. So don’t get sucked into paying extra fees because it is likely that you won’t have to anywhere else.
If you are looking to make some interest on your account, the best route to take would be a savings account or an instalment account. Interest is generally between 2% and 4% and can be paid at varying periods of time (annually, semi-annually, monthly, etc).
Depending on which bank you sign up with, you may be offered tax benefits (especially if you are considered a resident of South Korea). Rates vary between banks and types of accounts. For example, Korean Exchange Bank charges 10.5% for taxes on a Time Deposit account (numbers were collected in March 2007 and are subject to change).