Households' interest income hits 20-yr low amid historically low rate

Households' interest income from their deposits at banks and other financial institutes dropped to the lowest level in 20 years in 2015 as the central bank kept the rate historically low to bolster the slowing economy, data showed Sunday.

According to the data by the Bank of Korea (BOK), the country's central bank, households earned 32.18 trillion won ($27.5 billion) in interest on their deposits last year, down 19.5 percent from a year earlier. 

This marked the fourth straight year that their interest income has fallen on a year-on-year basis. The amount also represented the lowest since 1995, when it fell to 29.7 trillion won, the data showed.

Behind the plunge is the central bank's move to slash its interest rate to a historically low level. Last year, the BOK cut the interest from 2 percent to 1.5 percent to boost the slowing domestic demand and economy.

The lowest rate ever also drove down household spending on interest payments.

According to the data, household spending on interest payments related to borrowing shrank 16.5 percent on-year in 2015 to 32.04 trillion won. This is the smallest payment since 2005, when the corresponding figure was 31.54 trillion won. (Yonhap)