Tuesday, January 12, 2010
Korean Banking Part 3
I've only had one bank my entire life. When I was in elementary school, a nice lady would come once a month and collect a few dollars that my mother had given me (GAVE ME...GAVE ME I'm an English teacher now, I'd better start writing like one!) As I grew older, I continued to use them as for my checking and saving account.
Then one day, I checked the interest rate on my savings account. It was a paltry 0.25%. THAT'S LESS THAN 1% on a "SAVINGS" ACCOUNT I was losing money keeping it at the bank all all these years.
Wait...how do you lose money that's in a perfectly safe, FDIC insured savings account? It's called inflation. Inflation is the fact that everything gets more expensive each year. (There are exceptions...like computers...but they are more than balanced out by other things...say gasoline. Now look in the mirror and ask yourself which would you rather have...$2000 computers and $1 gallons of gasoline or $500 computers and $5 gallons of gasoline...)
For the last few years, inflation has averaged 2.60%. So $100 stuff at the beginning of the year is suddenly only able to buy $97.5 worth of stuff...hmmm this is starting to sound hard. Let's try to explain this another way...using something real...
Last year you spent $100 on beer. Last year, that bought 100 bottles of beer. (This is the good stuff that costs $1 a bottle, I'm from Seattle....land of the micro-brews...after all) The problem is that this year, due to "inflation" (or Washington's bad habit of raising beer taxes each year...) Suddenly, 100 bottle of beer costs $102.60.
But that's OK, since you've saved $100 dollars in a savings account at your local bank. With a 0.25...that turns your $100 in $100.25...you're $2.35 short
Now you're only buying 98 bottles of beer. Sad : (
What's even more depressing is that this "inflation thing" stacks on itself every year. So after 30 years, you're $100 is only buying 50 bottles of beer.
Depressing...you really need a beer...
...oh wait, you can't afford one...
OK...back to reality...When I found out my bank was only paying me less than a penny on the dollar, I moved my paltry savings to an online. But my checking account stayed where it was.
The bank was sold to another bank and I kept my checking account there. As long as I didn't have to pay for my checking and the statements kept coming in the mail...there wasn't really a difference.
That is until I came to Korea.
While, my banking account isn't a savings account by any means...it isn't a checking account as I understand it.
I checking account involves, well, checks and the attached checkbook.
Well, not over here. Checks here are issued from an ATM machine and they aren't TO a specific person, but FROM a specific. Let me explain, if a Korean has a check for 100 chon-won (around $ 90) and walks into the local "7-11" (and there are more kwiki marts here than there are street corners, I have 3 in my apartment building alone!) and hands over the check and a bag of squid flavored rice puffs...the teller will hand back 99 chon- won and the bag of chips which cost 1,000 won.
That's just how it's done here. Most Koreans don't have more than 100 chon-won in their wallet at any given time, but they will have a couple of checks in there. If they run out of cash, they'll simply buy something small at the "Mini-stop" and get 99 chon-won in change. That's just how things are done here. And the sales clerk just smiles and says thank you!
Odd, just think of the dirty look you would get if you gave a $100 dollar bill at the local AM/PM and asked for $99 dollars in change. That is...if they even accepted $100 bills.
The other thing that they don't do here is bank statements. Instead, they use something called a passbook. It's about the size of your standard check book and in it are pages that look like a check ledger book (you know, that thing that's in your checkbook, above your checks, that you don't use as often as you should...)
But the pass book has a electronic strip in it that lets it double as an ATM card. The ATMs here accept both the books AND ATM cards. When you use the passbook, the ATM automatically prints flips to the last page and prints out your latest account activity.
Case in point, my account back home in the US of A. Every month my parents get a piece of mail from my bank that has all the latest activity. Even if over the course of the past 11 months, only 1 or 2 things happen on my account each month, they still mail me a 3 page letter every month.
While in Korea, all I have is a small, thinner than a diary sized notebook that can fit inside a daily planner. Oh, and it only uses up a much space as it is used...while one person will fill 3 passbooks with all the times they withdraw money, I'm still on my first one.