Tax is withheld from the interest each month as it accrues, so only the net interest is credited to the account.
Interest on savings is normally taxed at 15.4 % in Korea (14 % interest income tax plus 1.4 % local tax). With monthly withholding, that tax is taken out of each month of interest as it accrues and only the net interest stays in the account.
Because tax leaves the account first, less capital compounds, so the final payout is slightly lower than with maturity-only taxation at the same rate and term. For a tax-preferential product (9.5 %) or a tax-free one (0 %), change the tax rate field.
Withholding tax at source takes the tax as each month of interest is credited, so only the net interest stays in the account and compounds. On 12 monthly deposits of 500,000 at 3.5 % with a 15.4 % tax rate the payout is about 6,097,109, roughly 17,700 less than the untaxed figure because the withheld money never earns further interest.
Monthly interest = balance × (annual rate / 12) · Tax = monthly interest × tax rateOnly the after-tax interest is credited, so it is the only amount that compounds in later months. Depositing 500,000 per month at 3.5 % for 12 months pays out 6,097,109 — 161 won less than the maturity-taxation version.
15.4 % for a standard account, 9.5 % for tax-preferential savings and 0 % for tax-free products. If financial income exceeds 20 million won a year, it becomes subject to global taxation and the effective burden can rise.
Paying at maturity leaves more money working, so for the same rate it always ends slightly higher. The gap is small over one year but grows with term and rate, which is why products that defer the tax look better over long horizons.
Each month the withheld amount is small and would only have earned interest for the remaining months. What you lose is the interest on the tax, not the tax, so the effect on the final payout is measured in tenths of a percent.