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Guide To Choosing The Best Savings Account For Your Child

ePOSBkids, OCBC Mighty Savers, UOB Junior Savers – Which savings account should you open for your child?

 

In the increasingly cashless world that we live in, most parents will open a savings account for their child even while their kids are still young.

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 to have this money mixed up with your own 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. When they are in their teens, they may have part-time jobs for which their savings account can be used to receive their salary.

As they grow older and have their own ATM card, this will be the savings account from which money would be withdrawn from.

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Differences Between A Child’s Savings Account And A Child Development Account (CDA)

As a parent, the first thing you need to know when it comes to opening a child’s savings account is not to 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 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

Announced in the 2016 Budget, all Singaporean children born from 24 March 2016 onwards will receive an initial $3,000 in their CDA.

# 2 Dollar-For-Dollar Matching

For the first and second child, the government will do a dollar-for-dollar matching whenever parents top up their child’s CDA, up to $3,000.

This 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.

Read Also: Step-by-Step Guide To Opening A Child Development Account (CDA)

On the other hand, a child savings account functions like a regular savings account that you and I have. 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.

 

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 account have a maximum eligible age. For example, Mighty Savers from OCBC 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 own 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 account meant for adults, most (but not all) child’s savings account do not have a minimum deposit required or fall-below fee.

Let’s look at some of the most popular savings account for children in Singapore.

 

OCBC Mighty Savers

Interest Rate: Earn up to 0.8% per annum. Refer to table below on how bonus interest is earned.

Source: OCBC

Eligibility:Children under 16, parent is required

Initial Deposit & Balance:None

Other Benefits:Able to win exciting prizes when you deposit at least S$400 in fresh funds. Can participate in OCBC Mighty Savers Programme privileges.

Source: OCBC

To find out more about OCBC Mighty Savers, you can click here.

 

ePOSBkids Account

Interest Rate: 0.05%

Eligibility: 18 & below. Parent or legal guardian is required.

Initial Deposit & Balance: No minimum deposit and fall-below fee until child turns 21. Thereafter, $2 per month if average daily balance below $500.

Other Benefits: Waiver of coin deposit fee until child turns 16; $1 gift deposit upon account opening; Free 6-month POPULAR Bookstore Student Card Membership.

To find out more about ePOSBkids Account, you can click here.

 

UOB Junior Savers Account

Interest Rate: 0.05%

Eligibility:Children under 16, parent is required

Initial Deposit & Balance: Minimum initial deposit of $500, a $2 fall-below fee will be charged if average daily balance for the month falls below $500

Other Benefits: Complimentary insurance coverage. If parent passes on, an insurance payout based on a percentage of the average daily balance in the account will be paid out

Source: UOB

To find out more about UOB Junior Savers Account, you can click here.

Read Also: [2018 Edition] Complete Guide to Baby Grants in Singapore

To help us on some future articles that we are working on, DollarsAndSense is conducting a survey among parents on the most popular child savings account in Singapore. If you are a parent with kids, do help us by completing this survey.

We will publish the result of our survey once we receive sufficient responses.

To access the survey, click here.

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