In an increasingly cashless world, most parents will open a savings account for their children even before their kids start getting a school allowance.
A savings account for your child is a sensible financial decision. Firstly, it allows you to set aside money meant for your child, rather than mixing it up with your personal savings. Secondly, a savings account for your child allows them to build up their own personal savings.
For example, when they are young, money from their Chinese New Year hongbao can be deposited into their savings account. They can also save part of their pocket money for school. When they are in their teens, they may have part-time jobs for which their savings account can be used to receive their salary.
For school-going children, new payment solutions can also be tagged to their savings accounts – and used at their school canteen. As they grow older and have their own ATM card, this will be the savings account from which money would be withdrawn.
Content:
- Differences Between A Child’s Savings Account And A Child Development Account (CDA)
- Characteristics Of Child’s Savings Account
- OCBC Mighty Savers Account
OCBC MyOwn Account - POSB My Account
- UOB Junior Savers Account
Differences Between A Child’s Savings Account And A Child Development Account (CDA)
As a parent, when it comes to opening a child’s savings account, you should not be confused yourself.
A child’s savings account that we are referring to in this article is not a Child Development Account. The Child Development Account (CDA) is part of the baby bonus scheme designed to help parents with the cost of raising children. These include a cash gift from the government and the CDA.
The CDA is a special savings account where money in the account can be used to pay for educational and healthcare expenses at approved institutions. CDA benefits come in two components.
#1 CDA First Step
As announced in the 2016 Budget, all Singaporean children born from 24 March 2016 onwards will receive an initial $3,000 in their CDA. For children born on and after 14 February 2023, this amount increased to $5,000.
#2 Dollar-For-Dollar Government Co-Matching
For the first child, the government will do a dollar-for-dollar matching whenever parents top up their child’s CDA, up to $4,000. For the 2nd child, dollar-for-dollar matching is up to $7,000 per child.
*If a child is born before 1 Jan 2021, the maximum Government co-matching is $3,000. For children born on 1 Jan 2021 to before 14 January 2023, the Government co-matching is $3,000 for the first child, and $6,000 for the second child.
The Government co-matching amount increases to $9,000 for the third and fourth child and $15,000 for the fifth and subsequent child.
In order to receive these funds, you need to open a CDA with one of the three local banks – OCBC, UOB and POSB.
On the other hand, a child savings account functions like a regular savings account . You (and your child in time to come) can deposit and withdraw your savings as and when you want. There are no restrictions on what you can use your savings for, unlike the CDA.
Read Also: Step-by-Step Guide To Opening A Child Development Account (CDA)
Characteristics Of Child’s Savings Account
A child savings account is similar to a regular savings account except for the following characteristics.
Age Of Child: Most of these savings accounts have a maximum eligible age. For example, the POSB My Account requires a child to be below age 16 in order to apply.
Parents (Or Legal Guardian) Required: The savings account requires a parent to open an account with the child. This is similar to that of a joint account. As a parent, you will also have the option of having internet banking access to your child’s savings account, tagged to your personal internet banking access. This makes it convenient for you to manage your child’s savings account.
No Minimum Deposit Plus Waiver Of Fall Below Fee: Unlike traditional savings accounts meant for adults, most (but not all) child’s savings accounts do not have a minimum deposit required or fall-below fee.
Interest Rate: Despite the elevated interest rate environment, kids savings account work similarly to regular savings account – they do not offer high interest rates. Nevertheless, some of them do pay slgithly higher than the marginal 0.05% regular savings account earn.
Let’s look at some of the most popular savings accounts for children in Singapore.
OCBC Mighty Savers
Interest Rate: Earn up to 0.3% per annum.
Eligibility: Children under 16. A parent is also required as a joint account owner.
Initial Deposit & Balance: None
Other notable benefits: OCBC CDA holders can earn additional bonus interest of 0.20%. OCBC Mighty Savers account does not charge a coin-deposit fee.
Source: OCBC
OCBC MyOwn Account
Interest Rate: Earn up to 0.05% per annum.
Eligibility: Children must be 7 to 15, and apply with their parents
Initial Deposit & Balance: None
Other notable benefits: Access to OCBC app; Can apply for OCBC MyOwn Debit Card (and enjoy exclusive deals); Exclusive Debit Card designs (with Disney and Marvel characters); 1-year Disney+ Premium subscription;
Sourcce: OCBC MyOwn Account
POSB My Account
One of the most simple bank account names we have encountered, DBS/POSB offers a bank account for kids which is called – My Account.
Interest Rate: 0.05%
Eligibility: Children under 16 can apply for a My Account with their parents
Initial Deposit & Balance: None required. Account fee of $2 per month. However, this is waived for customers below 16 years old or if your account is on eStatement.
Other notable benefits: $1 gift deposit, complimentary; No coin deposit fee when using coin deposit machines; Link to Smart Buddy Watch or Card for school payments (in Smart Buddy enabled schools) and tap on NETS payments, as well as PayLah! when they’re older.
Source: POSB
UOB Junior Savers Account
Interest Rate: 0.05%
Eligibility: Must be opened as a joint account with parents/legal guardian and children must be 16 years old or below
Initial Deposit & Balance: Initial deposit of $500, a $2 fall-below fee will be charged if the average daily balance falls under $500 for the month
Other notable benefits: Free insurance coverage of up to 100% of your deposit balance.
Source: UOB
Read Also: Here’s Why It Makes Financial Sense To Top-Up Your Child’s CDA As Early As Possible
The post Guide To Choosing The Best Child’s Savings Account In Singapore appeared first on DollarsAndSense.sg.
