"No debt investing, save instead"... Youth Future Savings surpasses 2 million subscribers in two weeks

[Financial News] The number of applicants for Youth Future Savings has topped 2 million just two weeks after applications opened.
The Financial Services Commission (FSC) said on the 2nd at 1 p.m. that applications for Youth Future Savings, which began on the 22nd of last month, had surpassed 2 million. The product offers an annual interest effect of up to 19.4%. Applications are available until 6:30 p.m. on July 3.
Youth Future Savings was launched to address the limitations of the existing Youth Leap Account. The maturity period has been shortened from five years to three, and the government contribution has been expanded from 3% to 6% to as much as 12%. With cooperation from banks, a base rate of 5% plus preferential rates of 2% to 3% by institution brings the total rate to as high as 7% to 8%.
When the government contribution and tax exemption on interest income are added, the effective return is comparable to a simple savings product with an annual rate of 13.2% to 14.4% for the standard type and 18.2% to 19.4% for the preferential type.
As fear of missing out has fueled debt-financed investing, word spread that this was a government-backed product designed to help young people build assets more stably, drawing a surge of applicants. Strong promotional efforts also supported the response. On the first day of applications, FSC Chairperson Lee Eok-won handed out coffee to young people in Seongdong-gu, Seoul, to promote the program. The campaign also included social networking service promotions using well-known influencers and parody videos made by staff members in the style of YouTube Shorts.
Any young person may apply during the application period regardless of birth year, as long as they meet the eligibility requirements. After the deadline, a three-week eligibility review will be conducted from the 6th to the 24th, and results will be individually notified on the 24th. Applicants who pass the review can open accounts for two weeks from the 27th to Aug. 7, and after opening an account, they may deposit freely from 1,000 won to 500,000 won per month.
Transfers from the Youth Leap Account to Youth Future Savings are allowed only during the initial recruitment period. In that case, the existing government contribution, tax exemption on interest income and preferential-rate benefits from the previous account will be retained. Youth Future Savings subscribers can also receive credit score points in addition to government contributions and tax benefits.
Those who participate in the "Financial Counseling for All Young People" program launched this month will also receive an additional 0.2 percentage point preferential rate. If they remain subscribed for at least two years and deposit a cumulative 8 million won or more, their credit score can rise by 5 to 10 points. For those switching from the Youth Leap Account, the subscription period and deposits made in the previous account will also be counted when calculating credit score benefits.
Meanwhile, President Lee Jae-myung instructed at a State Council of South Korea meeting combined with an Emergency Economic Review Meeting at Cheong Wa Dae on the 23rd, "Applications for Youth Future Savings have begun, so please do your utmost to promote and manage the policy so that it helps young people build assets stably," and added, "Let us decide to process everyone who applies within the two-week application period, as long as they meet the criteria, even if that means setting aside additional budget."


mj@fnnews.com Park Moon-soo Reporter