LG U+ teams up with a savings bank to retain customers

A model introduces LG U+’s new savings product released in partnership with Welcome Savings Bank on Thursday. Applications to subscribe to the plan, which offers a maximum annual interest rate of 8 percent, will be accepted starting next Monday. [LG U+]

Mobile carriers are partnering with banks to improve customer retention.

LG U+ said Thursday that it will offer a savings product with an annual interest rate of up to 8 percent in partnership with Welcome Savings Bank.

It’s hard to find savings products with annual interest rates of 8 percent these days. The average deposit rate was 1.69 percent in July, according the Bank of Korea’s latest statistics.

The carrier will accept applicants for the savings plan on four Mondays starting next Monday from 9 a.m. Each Monday, the carrier will take 5,000 subscribers in order of application for a total 20,000 applicants.

Applicants must be 19 years old or older and be subscribers to a LG U+ phone plan that costs more than 50,000 won ($41.82) per month.

The plan matures in a year. Users of the plan make fixed deposits each month - between 10,000 won and 200,000 won - per month.

According to the carrier, subscribers to the savings plan are immediately offered a 2.5 percent annual interest rate. If it is their first time subscribing to a product from Welcome Savings Bank, they get an additional 1.5 percent rate. If they choose to make automatic monthly withdrawals for the product from a Welcome Savings Bank account, they get another 2 percent rate benefit. If the subscribers keep the savings plan until maturity, they get another 2 percent benefit as they withdraw their savings.

This way, the total annual interest on the plan becomes 8 percent.

Before LG U+, SK Telecom released a similar savings plan in partnership with DGB Daegu Bank in May. The savings product offered a maximum 5 percent annual interest rate.

KT partnered with BNK Busan Bank last month for a loan product. For new subscribers to KT’s mobile service, the bank said it will cut maximum 0.2 percent of interest on loans of up to 100 million won.

With the partnerships, mobile carriers can retain subscribers for a longer period of time. While shifting carriers after one or two years has become common to get new phones at discounted prices, these financial products can prevent customers from changing carriers at least until the savings plans mature.

Carriers can also save on marketing costs, as the interest offered to customers is handled by the banks.

From the bank’s side, they can attract more customers to their institutions and introduce other products they have to customers using the opportunity.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]