Installment Savings Accounts with Rates from 5.50% to 6.25% at Woori America Bank in NY, NJ, PA, MD, VA & CA

Thank you for these interesting “new” savings accounts. Have you seen any calculator to use when you have a lump sum and want to payout into the installment savings account? For example placing $10,000 in a high (well somewhat high) yield savings account and transferring monthly to an installment account. I know the APY would be a function of both accounts and how long money is in each account, but not quite able to develop my own financial calculator, this is definitely “higher” math.

That's a good idea about a calculator. One thing that complicates this is the variability of the high yield savings account rates. You would definitely want to set up automatic transfers from the high yield savings to the checking account so that you don't have to keep much money in the checking account earning little if any interest.

Mary,

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%.

The reverse payout calculator works well. Thank you.
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?

Mary,

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.

Woori America Bank also has a Web Savings Account.

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.

Banking Guy -- If you can find some "reverse-installment" savings, that will be interesting!

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.........

DataIsGold and Banking Guy I appreciate the interest rate math help. You are right; the installment savings is a wonderful option and seems perfect for those who self-trustee their retirement plans. The accounts would provide a very nice arrangement to deposit your monthly withholding contributions. Thank you again.

and then of course if the bank goes bankrupt, your money is gone. Not to mention the taxes you gotto pay for the federal government.

Paper money is a joke. Relying on it for your retirment, is just like buying fish in the sea. Try buying gold, it never goes worthless.

Banking Guy, you certainly put a lot of time and effort in the site to keep us informed with the latest banking twists and turns.
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.....

There is nothing special about it.
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.

Woori America Bank has strong ratings. A quick search of the holding company was somewhat disquieting.

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

This is the correct link to the second article.

http://english.chosun.com/w21
data/html/news/200904/200904020016
.html

Mary, are you saying we should slightly worry about Woori?

I opened a One Heart Savings account today. One important detail to note, however. The CSR at the Ridgefield, NJ branch told me that when the account matures, you must physically go to the same branch at which it was opened in order to close the acccount. By the way, no language problems!

I mentioned this to several people. Two of them said "What happens if North Korea invades South Korea?" (I think they're trying to be funny.) As of now, I plan to take the few hundred mile trip to Philly. But, I do plan to get more information first. (I've already called Woori America Bank once and spoke to a Korean woman who knew very little English. That was interesting.) I refuse to settle for 2%! Someone please give me a solid reason to NOT do this, considering it is an FDIC insured bank with a 4-star rating. Thanks.

Anonymous (see comment dated 7:22 AM, April 18, 2009) is essentially correct, though he doesn't take the time to explain himself. Suppose you did an installment savings 4-year term at Woori for $50k. That means you contribute $44,816 (933.66/month times 48 months) and then they give you $5184.00 in interest. This has the same net effect of purchasing a $44,816 CD for a 4-year term at 2.74%. (Note: I am compounding monthly, incl. interest in both cases). Either way gets you to $50k in 4 years. The benefit to the installment savings plan is that you don't have to lock in the entire $50k for 4 years. You're only locking in "new" money that you contribute, and you can do something else with that $50k.

Not a pleasant experience. Bank refused to open CD. Bank manager said she had to know her customers and she did not know us. Must not only be instate, but apparently very local, or pass another test perhaps a different nationality. Branch manager would provide no written explanation. CSR obviously did not want to have us as her customer.

Opened an account at the NYC branch today, the CSR was pleasant, it took about 30 minutes.

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

According to the "More Dream Club Savings & One Heart Club Savings" disclosure sheet that I got from the Ridgefield, NJ branch, the early withdrawal penalty in NY, NJ, PA, MD, & VA is 6 months of interest (CA is 2 months). Follow up contact with Ridgefield branch has been very pleasant.

From the disclosure I received from the NY branch:

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

To Anonymous @ 1:58 PM - in the booklet "Important Account Information for Our Customers" the early withdrawal penalties you mention are under the heading for the Happy Club Savings Account. The disclosure sheet I received from the Ridgefield branch, which is a separate sheet, appears to be a supplement that may have been prepared by the Ridgefield branch. I wonder whether each branch sets it own early withdrawal policy for the More Dream and One Heart Savings accounts? On further reflection, I suspect that you may be right, as the bank's website indicates an 18 month loss of interest early withdrawal penalty for the One Heart Savings account.

@Anonymous, at 8:20 AM, April 29, 2009

Which branch did you go to?

Note that some of the analyses here regarding the effective interest rates is faulty.

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.

I opened the (FDIC-insured) account recently and experienced no problem at all. They were very friendly in Philly and it was worth the several hour drive to get there. (Extreme times require extreme measures.) Savers are currently being punished because lenders "forgot" how to loan and borrowers don't know how to add. This was one way to fight back. Online banking may be another. Again, this is NOT an earth-shattering account rate. A long-term, lump sum CD at 2.75% is roughly equal to this plan. BUT, every dollar you put into this account WILL earn approx. 5-6%. I like the sound of that.