Comparison of Kids' CDA Savings Accounts
Most of us have a POSB bank account when we were young as it was the only bank for children those days. Nowadays, seems like all the banks have kids' savings accounts and they come up with many different ways to attract the kids' angbao money. After the comparison on the bank accounts for adults, I intend to compare the banks accounts for kids too.
Conclusion
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I think having a kid's account is a good way for your child to understand the concept of money and savings and even compound interest. However, I don't encourage parents to allow them the freedom of withdrawing the money without your permission because kids are still kids, they might lend to a friend, buy toys, join some MLM events or even go somewhere expensive. All true stories.
In any case, kid' savings accounts are worth while to take a look as their money will probably be untouched for 20 years. Using the basic interest rate of 0.05%, the magic of compound interest can bring your annual $500 angbao to become $10,000! So, let's take a look at the comparison between ePOSB kids, UOB Junior Savers, OCBC Mighty Savers, CIMB Junior Saver, Standard Chartered eSaver kids, Citibank Junior Savings and Maybank Youngstarz.
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| Highlighted boxes give the best interest rates |
For all these accounts, a parent has to be a joint account holder. CIMB has the highest interest rates at 0.8% with a $1,000 minimum balance. However, CIMB has only 2 locations, so it might not be convenient for everyone. Additionally, CIMB Junior Saver interests is only up to 12 years old.
Some parents are more comfortable keeping the money in a local bank. A point to note is that all banks are equally safe with the government guarantee of $50,000 deposit.
OCBC would be the next best choice. You would have to deposit $50 without withdrawals every month to get the additional 0.35%. Otherwise, if your child has an OCBC CDA account and also the OCBC Mighty Savers, the interest is at 0.45%. It's still better than the other banks without the monthly deposits.
A point to note, I do not care for the 'free' insurance that comes along with the accounts. Unless you already plan to have a certain sum in the bank, it's not 'free' at all.
Some parents are more comfortable keeping the money in a local bank. A point to note is that all banks are equally safe with the government guarantee of $50,000 deposit.
OCBC would be the next best choice. You would have to deposit $50 without withdrawals every month to get the additional 0.35%. Otherwise, if your child has an OCBC CDA account and also the OCBC Mighty Savers, the interest is at 0.45%. It's still better than the other banks without the monthly deposits.
A point to note, I do not care for the 'free' insurance that comes along with the accounts. Unless you already plan to have a certain sum in the bank, it's not 'free' at all.
What this means for me
I have an OCBC CDA account for my child and I prefer the convenience of a nearby bank location. Even though I am using UOB One account for myself, I have no qualms about going with OCBC Mighty Savers for my child. After all, it's free money!
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Disclaimer: This post is not sponsored by any banks. Follow me on Facebook if you like to read the latest news on family finances. You may also like to compare the prices of different brands of diapers and formula milk.
Jes
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I did the comparison when my boy arrived with the same conclusion. After all, I banked with OCBC (365, CDA, SRS) and am a shareholder of OCBC.
ReplyDeleteHi Caelitus,
DeleteThanks for sharing your findings. I am glad we are in line but seems like there are really not many good alternatives. Woah, you are really an OCBC fan! I no longer have their OCBC 360 account but I do have their business account though. That reminds me to do a comparison post on business accounts next. Appreciate you dropping by! :)
Hi apart from saving account, you may want to consider putting their savings into Singapore Bonds or Reits which generate higher interest. Alternatively, transfer their saving into OA. The money will compound and grow to a substantial sum when they are 21.
ReplyDeleteHi Investminds,
DeleteDepositing savings into SSB or Reits would be considered an investment and some parents would not be comfortable with that.
No offence but I disagree with you on transferring their savings into CPF. This angbao money is supposed to be liquid and able to be withdrawn and used at 21 years old. If you deposit it into CPF, yes it's gonna be substantial in the future but it's not going to help when the children need money the most at the start of working life. I think when they are older, they can decide for themselves. Appreciate your suggestions though!
Hi Jes, no worries. It is up to the parent's risk appetite. Just to share, I have transferred all my children savings into Reits (Afternote: I did alot of homework before i invest their ang bao money) because the bank interest is very low. To date, I have achieved more than 10 percent capital gain for their Reit counters @6-7 percent annually. I am collecting the Reits quarterly DPUs and reinvest them. The reits will be liquid-ed when they need the money. Yesterday, I went to CPF and spoke to officers about voluntarily putting money into their OAs. The advantage is that the parent can have tax rebate and there will be some money in their OA for the children when they need to purchase their flat. I will doing the voluntarily this year after collecting the DPUs from Reits.
ReplyDeleteHi Investminds,
DeleteIt's good you did your homework and got good returns. Just a note of caution to other parents reading this, do watch out for recession periods where stocks will drop very low for a few years. It might be wiser to invest with money that you don't need.
Anyway, I don't even top up my own CPF accounts haha! For me, money is not enough to invest and do my own business. Good for you, seems like you have a lot of excess cash. Keep it up and thanks for sharing! :)
Why don't you save for them in CIMB FastSaver account? This is an online-only account, but gives you 1% p.a. with no hoops to jump through. The only issue is that the account will be under your name, not your child's, but I guess that's okay at least in the beginning?
ReplyDeleteHi F4FF,
DeleteSorry must have missed out on replying you! Well if it's under my name then I rather stick with my current UOB One account. I think most people would want the kids' savings account in their kids' names so that 1) Parents don't use them and 2) They can own the account in the future.
Thanks for the suggestion though!
I've been looking around for child savings accounts with a baby on the way. Great article!
ReplyDeleteThanks Mike, all the best to your fatherhood journey! :)
DeleteCan I get an ATM card with any of these joint accounts?
ReplyDeleteHi there,
DeleteIf I am not wrong, you can get an ATM card for our local banks like OCBC, UOB and DBS with these accounts. For Citibank, you can only get when your child is 15 years old. For other foreign banks, there is not much information on it but anyway, they do not have many ATM counters.
Hope this helps! :)