Our government has introduced several initiatives to help parents to kickstart their parenting journey by lightening the financial load of raising a child in costly Singapore, and one of them is the Baby Bonus Scheme. There are two parts to this scheme, namely, the Cash Gift and the Child Development Account (CDA). In this post, we will focus on CDA, and how to pick the most suitable bank for your child.
CDA is a special account for your child. After applying, you will receive a NETS card for this account. The money deposited into the account is not allowed to be withdrawn, but can be spent on certain healthcare/educational items or services from Approved Institutions (AIs) using that NETS card. Usually I will check at the register if the items are payable by CDA. Some vaccinations can also be paid via CDA.
For your 1st and 2nd children, each CDA account will have the dollar-for-dollar matching of up to $3000. This means that for each child (1st/2nd-born), the government will give up to $6000 (inclusive of the $3000 fixed amount I mentioned in the paragraph above) IF you deposit $3000 into the account. Any excess will not be be matched by the government. For the 3rd/4th children, the government will match dollar-for-dollar up to $9000 of your deposit, so in all you get up to $12000 from them. Any subsequent child (5th onwards), will see a dollar-for-dollar matching of up to $15000, so in all, your child will receive up to $18000 from the government in their CDA. To read more, check out this link from MSF.
Which Bank is the Most Suitable for You and Your Child?
Now, we shall look at the main point of this post. Many parents often wonder which bank is the best. I would say that this is subjective, and you should pick the most suitable one for your child, based on what they can offer. You may open your child’s CDA in DBS/POSB, OCBC or UOB. I am going to summarise the perks of opening your child’s CDA in each bank.
All 3 banks offer an interest rate of 2% for your child’s CDA deposit, but only UOB does not have a cap on the amount to enjoy this attractive interest rate. There is no minimum deposit required to maintain the account or to get the 2% interest rate. If you open a CDA account with OCBC, you will enjoy additional interest in your child’s savings account with them; the other 2 banks do not seem to have any similar promotion for the kids’ savings account. Check out the table below for more details.
| DBS/POSB | OCBC | UOB | |
|---|---|---|---|
| Interest Rate | 2% | 2% | 2% |
| Min. Amount | $0 | $0 | $0 |
| Cap on 2% Interest Rate |
Any amount beyond will only earn an interest of 0.05%. | $36000 Any amount beyond will only earn an interest of 0.05%. | No cap; any amount in the account will be entitled to 2% interest. |
| Kid's Savings Account | ePOSBkids Account No additional perks if you open a CDA account with them. Interest rate: 0.05% to 0.1% depending on how much you deposit | OCBC Mighty Savers Get additional 0.4% interest if you open CDA account with them. Interest rate: Up to 0.8% (inclusive of 0.4% bonus from CDA) | UOB Junior Savers Account No additional perks if you open a CDA account with them. Interest rate: 0.05% to 0.1% depending on how much you deposit |
| Others |
We picked OCBC for Baby J’s CDA account after considering these factors:
- $36000 cap for 2% interest seemed like a good balance among the 3 banks. Since we are not able to withdraw cash from the account, we doubt we would store that much an amount in this account.
- We wanted an option to be able to open a kid’s savings account that offered a good interest rate, and OCBC Mighty Savers fulfilled that criteria, albeit with some conditions to get the full 0.8% interest (must make monthly deposits). We opened a savings account for Baby J in another bank though, and I have written a post on how we picked the right savings bank for Baby J.
- I have a few OCBC accounts, so it makes it more convenient to check on Baby J’s CDA via Internet Banking.
- We do not need good merchant deals as we mostly get hand-me-downs from family and friends (we believe in reusing!), so that wasn’t part of our consideration. We also do not own the OCBC 365 credit card which has cashback for certain items. We already have our own endowment plans from other insurers, so we do not need additional plans from OCBC.
Have fun planning and hopefully this will act as a useful guide for you to choose the right CDA bank for your and your little one’s needs! 🙂
Picking Your Child’s Savings Account | Our Little Casa
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