When baby Isaac was born, we looked into the offerings by OCBC, UOB and POSB for a CDA (Child development account).
As he is our first child, we will be entitled to a $3,000 First-step grant and $3,000 one-for-one matching to his CDA.
Funds in this account can be used for a variety of expenses especially child care centre fees. Hence, we were quite comfortable putting in some money for him there.
Take note of the CDA First Step Grant and birth order of your child to know your bonus.
Summary of the CDA offers from the 3 banks (Updated Jan 2020)
POSB has raised it's 2% interest for balances up to $50k which I think is more than enough.
Previously, it was only first $12k.
There used to be more perks... This below is for last year 2019.
ALL are 2% p.a interest now
Today, ALL the CDA accounts offer the same 2% p.a which is more than most fixed deposits.
We were sure that we wanted to tap on it and have budgeted about $30k. From my calculations, it should roughly be enough to last for school fees to K2.
In my opinion, UOB's offering of 2% interest with NO CAP is good but not of much use.
There is little reason to put too large an amount into CDA because funds cannot be freely withdrawn.
It can only be used for education and healthcare mainly.
Only OCBC has a cap of $36,000 which I'm willing to accept in view of the savings account interest which I'll mention below.
If you are wondering what personal accident to get for your baby, then this post can help you.
Explanation of the SOMPO PA Star which can cover for your family. More here
OCBC's Mighty Savers Account makes the OCBC CDA attractive!
Previously Mighty Savers Account gave up to 0.8%p.a interest.
It has since shrunk a bit but still better than a normal savings account.
Meanwhile there is also a promotional gift till 8Mar2020!
This may be useful: OCBC CDA HOTLINE
Call the Baby Bonus Hotline at 1800 253 7707 (Monday to Friday, 8.30am to 5.30pm) to find out.
What we have been doing is to do the minimal $50/m giro to his Mighty Savers Program. This qualifies his savings account to get 0.8% p.a.
While 0.8% p.a today is not a lot, this savings can still be freely withdrawn from the parent's IBanking access. Hence, we're kind-of using this as a emergency cash holding for the family.
All the ang bao's have been going there over the last 2 years too.
CDA account rates can change... some history
Previously in 2015, UOB did a tiering system for interest in CDA and thankfully it has been revised.
POSB previously had a guarantee on the 2% rate for 5 years but they have removed it.
In year 2011, Standard Chartered Bank had the best CDA interest rate offering at 1%/y only. Now it's all at 2%. Standard Chartered is not even offering support for it anymore from Dec2018.
So ya, things do change.
Looking to find out the best saving plan for your child,
CDA account becomes PSEA account after age16
At 16 years old or after completing secondary school, the money in your child Edusave account and unused CDA account will also be transferred into the Post-Secondary Education Account (PSEA).
The PSEA account‘s earns 2.5% p.a. interest which is similar to CPFOA.
It can be used mainly for
- Tuition fees at local universities, polytechnics, art schools, ITE, and other approved institutes
- Compulsory hostel fees for certain courses
- Payment of government or CPF education loans
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Last updated on January 17th, 2020 at 01:18 pm