Teaching Your Child About Money: What to Look For in a Children’s Savings Account in Singapore
Opening a bank account for your child is a significant milestone. It’s more than just a place to stash birthday money; it’s the first major step in teaching them about financial literacy, the value of money, and the power of saving. In a fast-paced financial hub like Singapore, giving your child these skills early is one of the most valuable lessons they can learn.
But with various banks offering accounts tailored for kids, what features *actually* matter? This guide breaks down exactly what to look for to find the best fit for your family’s goals.
Table of Contents
Why Start a Savings Account for Your Child?
A dedicated children’s account serves two primary purposes:
- The Educational Tool: It transforms money from an abstract concept into something tangible. Your child can watch their savings grow, learn about deposits and withdrawals, and understand the basics of compound interest. It’s a hands-on sandbox for financial education.
- The Long-Term Nest Egg: It provides a dedicated place to save for their future, whether for education, a gap year, or their first big investment. Starting early harnesses the power of time.
Key Features to Compare
When you start browsing options, you’ll be met with a lot of marketing. Focus on these core components to see which account truly offers the best value.
InterestRates: Standard vs. Bonus
For a child’s account, the interest rate (or ‘profit rate’ for Islamic banking) is often a key motivator. However, you need to read the fine print.
- Base Rate: This is the standard interest rate the account earns, regardless of other factors. It’s often quite low.
- Bonus Rates: This is where banks compete. Bonus interest is often *tiered* or *conditional*. For example, a bank might offer a bonus rate on the first $50,000, or a “promo” rate for the first year.
Ask the bank: What is the base interest rate? How is the bonus interest calculated, and what are the conditions (e.g., minimum monthly deposit, no withdrawals) to earn it?
Fees and Charges: The Hidden Pitfalls
A good children’s account should minimise fees. The last thing you want is for charges to eat away at your child’s savings.
- Monthly/Annual Fees: Most kids’ accounts in Singapore waive these, but it’s crucial to confirm.
- Fall-Below Fee: This is a common charge in Singapore. Many children’s accounts waive this fee *until the child reaches a certain age* (e.g., 18 or 21). Check what happens after that milestone.
- Transaction Fees: Are there fees for over-the-counter transactions, ATM withdrawals, or coin deposits?
Accessibility and Age Milestones
Consider how you and your child will interact with the account.
- Account Operation: Most accounts for young children are ‘In-Trust’ accounts, meaning the parent or legal guardian operates them.
- Joint Accounts: Some banks allow a joint account, giving both parent and child visibility.
- Conversion Age: What happens when your child turns 16, 18, or 21? Does the account automatically convert to a standard adult savings account (which may have high fall-below fees)? This is a critical point to clarify.
Minimum Deposits and Balance Requirements
A high initial deposit can be a barrier for some families. Look for accounts with:
- Low (or no) Initial Deposit: Many accounts can be opened with as little as $1 or $100.
- Minimum Balance to Earn Interest: Don’t confuse this with the fall-below fee. Some accounts require a minimum balance (e.g., $500) before they *start calculating interest*. An account that pays interest from the first dollar is ideal for teaching the power of saving small amounts.
Digital Tools for Parents and Kids
As your child grows, digital access becomes more important. Check the bank’s online and mobile banking platform.
- For Parents: Can you easily view the account, set up recurring transfers, and manage it from your own banking app?
- For Kids: Does the bank offer a kid-friendly app or interface? Some platforms have educational games, savings goal trackers, and simplified views that can get children more engaged in their own finances.
Extra Perks and Insurance
To stand out, some banks bundle their accounts with other benefits. While these shouldn’t be the main reason you choose an account, they can be a nice bonus.
- Welcome Gifts: Often offered for fresh funds (e.g., a small cash credit or gift).
- Insurance Coverage: A common perk in Singapore. Some accounts offer complimentary (or ‘free’) insurance coverage for the child or parent, often covering personal accidents or specific medical conditions. Always read the terms to understand the coverage amount and exclusions.
- Discounts: Partnerships with bookstores, educational centres, or kid-friendly merchants.
A Special Case: The Child Development Account (CDA)
It’s vital to distinguish a regular children’s savings account from the Child Development Account (CDA).
The CDA is a special savings account that is part of Singapore’s Baby Bonus Scheme. Key features include:
- Government Co-Matching: The government provides dollar-for-dollar matching on savings deposited into this account, up to a certain cap (which varies by birth order).
- Restricted Use: The funds in the CDA can only be used for specific educational and healthcare expenses at approved institutions (e.g., childcare centres, clinics, pharmacies).
- Designated Banks: You can only open a CDA at DBS/POSB, OCBC, or UOB.
The takeaway: Your child should ideally have *both*. The CDA is for leveraging government grants for essential expenses, while a regular savings account is for teaching broader financial habits and long-term, flexible saving.
How to Choose the Right Account for Your Family
There is no single “best” account. The right choice depends on your goals.
| Your Primary Goal… | What to Prioritise… |
|---|---|
| Teaching Financial Literacy | Low/no minimum balance, interest from the first dollar, and good digital tools for kids. |
| Long-Term Education Savings | Higher bonus interest rates (even with conditions), and minimal fees. |
| Simplicity and Convenience | An account with your primary bank for easy fund transfers and a low-effort user experience. |
| Maximising Perks | Bundled insurance benefits or merchant discounts that you will actually use. |
The Process: What You’ll Need
Opening an account is generally straightforward. While processes vary slightly between banks, you (the parent or legal guardian) will typically need:
- Your NRIC (or Passport/FIN for foreigners).
- Your child’s Birth Certificate (or Passport/MyKid for non-Singaporeans).
- Proof of address (if not shown on your NRIC).
- Many banks allow you to start the application online, especially if you are an existing customer.
Choosing your child’s first savings account is a practical task, but it’s also a deeply valuable one. By focusing on low fees, accessibility, and features that support learning, you’re not just opening an account—you’re opening a conversation about financial well-being that will last a lifetime.
