Installment Savings Accounts with Rates from 5.50% to 6.25% at Woori America Bank in NY, NJ, PA, MD, VA & CA
POSTED ON BY Ken Tumin
Another Korean American bank is offering high rates on an installment savings account. Woori America Bank is offering a 5.50% 48-month plan, a 5.75% 60-month plan and a 6.25% 120-month plan. Minimum contract amount is $1,000, and it requires you to have their free checking account. These rates are listed on the bank's home page and in the bank's promotion page as of 4/17/09. The account is called the One Heart Savings.
This installment savings account requires that you have automatic monthly transfers from their Free Checking to the One Heart Savings during the entire term. The deposits earn a guaranteed interest rate, and you'll receive the contract amount at maturity if you maintain the monthly deposits. According to the small print, if the auto transfers fail more than twice, the regular rate (Happy Club Installment Savings) will be applied.
Like a CD, installment savings accounts typically have early withdrawal penalties. For this account, those in California have a big advantage. According to the small print, the early withdrawal penalty is only 2 months of interest for those in CA. Customers of their east coast branches are charged 18 months of interest. Perhaps they're facing more competition in CA.
I called the bank this morning, but I wasn't able to get too many additional details from the CSR. I did confirm these rates listed on the website are current. She didn't know how long they would last. I was told that a branch visit would be required to open accounts. Branches are located in New York, New Jersey, Pennsylvania, Maryland, Virginia and California.
Woori America Bank has strong ratings for safety and soundness: 4 stars (excellent) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 12/31/08 financial data. The bank is regulated and insured by the FDIC (FDIC Certificate # 24920).
Thanks to the reader who emailed me news of this account.
Other Installment Savings Accounts
These installment savings accounts seem to be popular among Korean American banks. In the last couple of months, I've posted on several with high rates. Similar to Woori America Bank, most are located around California and New York and require a branch visit. However, Wilshire State Bank is offering one that is available nationwide via an online application. It has rates up to 5.12% APY for a contract term of 3 years (see post). To find other installment savings accounts, refer to my Installment Savings Accoung Page.
This installment savings account requires that you have automatic monthly transfers from their Free Checking to the One Heart Savings during the entire term. The deposits earn a guaranteed interest rate, and you'll receive the contract amount at maturity if you maintain the monthly deposits. According to the small print, if the auto transfers fail more than twice, the regular rate (Happy Club Installment Savings) will be applied.
Like a CD, installment savings accounts typically have early withdrawal penalties. For this account, those in California have a big advantage. According to the small print, the early withdrawal penalty is only 2 months of interest for those in CA. Customers of their east coast branches are charged 18 months of interest. Perhaps they're facing more competition in CA.
I called the bank this morning, but I wasn't able to get too many additional details from the CSR. I did confirm these rates listed on the website are current. She didn't know how long they would last. I was told that a branch visit would be required to open accounts. Branches are located in New York, New Jersey, Pennsylvania, Maryland, Virginia and California.
Woori America Bank has strong ratings for safety and soundness: 4 stars (excellent) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 12/31/08 financial data. The bank is regulated and insured by the FDIC (FDIC Certificate # 24920).
Thanks to the reader who emailed me news of this account.
Other Installment Savings Accounts
These installment savings accounts seem to be popular among Korean American banks. In the last couple of months, I've posted on several with high rates. Similar to Woori America Bank, most are located around California and New York and require a branch visit. However, Wilshire State Bank is offering one that is available nationwide via an online application. It has rates up to 5.12% APY for a contract term of 3 years (see post). To find other installment savings accounts, refer to my Installment Savings Accoung Page.
I had the same thought. So I thought using a retirement withdrawal calculator would help to answer this.
http://www.americantrust.com/Retirement_Planning/Planning_Tools/Withdrawal_Estimator.html
Let's say you have 10,000 in Cash and you want to do the 10,000 Woori plan @ 48 months.
So in the calculator i put
10,000 Balance at Retirement
186.73 Monthly Withdrawal (Contract amount)
0% inflation rate, let's just get the raw number
4 years in retirement (Basically your Installment savings Term)
2% interest Rate (The rate you're getting in your savings account over the next 4 years, I use the very conservative number)
So you get:
Ending Balance in your Savings of 1496.43 includes the 459.47 of interest over those four years in your Savings Account
You deposited 8963.04 into Woori to get 10,000 which is 1036.96 in interest.
So your total balance at the end of four years is
11496.43
Assuming no more additions to your Regular Savings and interest rates stay low at 2%.
I took your numbers and a regular CD calculator. Assuming 2% for the savings account and 5.50% for the 48 months installment savings account, the APY appears to be 3.49%. Is this correct?
Yes it looks like you'd get an overall 3.49%.
If we use the highest saving rate that BankDeals guy posted, 3.10%.
And rates don't increase/decrease over the next 4 yeasr.
Then you'd get an overall of
4.07%
So question would be can you find a 4 year CD with more than 4.07% if you have the lump sum now.
For those without the lump sum now, this installment plan looks great, just my 2cents.
I tried to call to get the rate, but I couldn't understand the CSR. I was told they didn't have anyone at the branch at that time that spoke clearer English.
I hate banks that don't post their rates on their Website.
For example:
Bank A is pay 6% APY on your lump sum deposit and will pay you an "installment" each month for N months.
Then Use your "installment" for in installment in Bank B which will pay you ~6% also for N months.
That'll be ideal........woooooooyooooo.........
This site provides one stop shopping for all our savings needs. Now if the Fed would co-operate and raise rates to a realistic level.....
These are essentially ZERO coupons
issued by Banks.
There is no compounding of the interest earn and the total earned is slightly less then comparable CD.
http://english.chosun.com/site/data
/html_dir/2009/04/17/2009041700886
.html
http://english.chosun.com/site/data
/html_dir/2009/04/17/2009041700886
.html
http://www.koreatimes.co.kr/www/new
s/biz/2009/04/123_42958.html
http://english.chosun.com/w21
data/html/news/200904/200904020016
.html
They call the high yield 12-36 month account "The More Dream Club Savings" and there is "only" a 12 month early withdraw penalty (2 for CA)
PDF Rate Sheet
A substantial penalty will be imposed if you withdraw any principal before maturity date. The early withdrawal penalty will be assessed as follows:
-Term up to 1 year: 6 months loss of interest
-Term 1 year to 3 years: 12 months loss of interest
-Term 3 years or more: 18 months loss of interest
Which branch did you go to?
While there in nothing wrong in the calculation of the effective interest rate - the assumption that the authors seem to make is that you're sitting on the lumpsum for the entire period without earning any interest.
The advantage of the installment savings even when you have a lumpsum is that you can stick that money in a money market at a credit union and earn interest on that balance for the entire period. My credit union currently pays close to 3%.
So this money market interest rate should be added to the effective interest rate for an apples to apples comparison.