There are many things that new parents have to prepare for before the birth of their kids such as choosing the gynecologist, hospital and the search for confinement nanny. Most, in fact almost all, of these activities are totally new to them. Most of time, they are consumed with such activities that forgot that there are many things that the Singapore government are giving them. Thankfully, Ministry of Social and Family Development (MSF) has a useful Baby Bonus website to help you understand these benefits. However, there is one more decision that the new parents have to make, it is which bank to open the CDA .
There are three banks which administer CDA: DBS/POSB, OCBC and UOB (Standard Chartered used to be one of them, but has since stopped). I hope that with this post, I will attempt to help new parents and/or parents-to-be choose a suitable bank for their kids’ CDA based on analysis of two key areas offered by each bank: CDA bank interest and card benefits for CDA trustee.
What is the CDA for?
The Baby Bonus website will let you know more. One of the reason for the CDA account is for MSF to deposit baby bonus (ie free cash from the government) into your child’s account. For a child born on or after 24 Mar 2016, receive maximum CDA benefit of up to:
- $6,000 for 1st and 2nd child
- $12,000 for 3rd and 4th child
- $18,000 for 5th and subsequent child
What can CDA money be used for?
Money in the CDA can be used to pay for permitted expenses incurred at Approved Institutions via NETS (A NETS card will be issued by the issuing bank) or GIRO, for all your children.
Approved Institutions, which must be registered with the Ministry of Social and Family Development (MSF) under the Baby Bonus Scheme. You can check for the list of Approved Institutions here.
Highlights of difference in benefits between the 3 banks?
CDA interest rate analysis:
- CDA interest rates are mostly 2% but DBS/POSB and OCBC have caps.
- UOB is the best with no caps to the 2% interest.
- OCBC is second by offering 2% interest for first S$36,000.
- DBS/POSB is the worst as it only offers 2% interest rate with caps based on order of child birth.
|Deposit Amount||DBS / POSB||OCBC||UOB|
|$0.01 to $12,000||1st child:||2%||2%||2%|
|5th child & beyond:||2%|
|$12,000.01 to $24,000||1st child:||0.05%||2%|
|5th child & beyond:||2%|
|$24,000.01 to $36,000||1st child:||0.05%||2%|
|5th child & beyond:||2%|
|$36,000.01 & beyond||0.05%||0.05%|
CDA-trustee’s credit card benefits analysis
- Both DBS/POSB and OCBC offers additional benefits for CDA-trustee’s credit cards by giving 3% cash rebate for medical spend in Singapore (card-present transaction at hospitals, medical and dental clinics).
- However, DBS/POSB’s 3% cash rebate for medical spend on POSB Everyday credit card/POSB Passion debit card is promotional (valid between 13 July 2017 and 30 July 2018).
- UOB does not offer any additional credit card benefits for CDA-trustee.
|Card benefits for CDA trustee||DBS / POSB||OCBC||UOB|
|Card||POSB Everyday credit card
or POSB Passion debit card
|OCBC 365 Visa credit card||NA|
|Cash rebate amount||3%
(Promotion is valid between 13 July 2017 & 31 July 2018)
|Cash rebate spend category||Medical spend
On-site spend on medical services made at all hospitals, medical and dental clinics in Singapore
On-site transactions made at all hospital, medical and dental clinics in Singapore
|Cash rebate spend category exclusions||Card-not-present transactions such as online transactions,
mail/phone order and all spends at healthcare related merchants such as, but limited to, Watsons, Guardian, GNC, Hockhua Tonic, NTUC Unity and Eu Yan Sang etc.
|Transactions that are not made in person (such as online, telephone order or mail order) will not be eligible|
|Minimum spending amount to qualify for 3% rebate for medical spend||Minimum spending of S$500 per calendar month||Minimum spending of S$600 per calendar month|
|Cash rebate cap||$50 per month||$80 per month|
|Other bonus spend category which applies to non-CDA trustee||Petrol: SPC only||6%||Petrol:||5%|
|Grocery: Sheng Siong only||5%||Grocery:||3%|
|Dining: Online food delivery||14% (valid till 30th Sep 2017 & minimum S$600 spend per calendar month)||Dining: Overseas||3%|
|Dining: Weekdays (local & overseas)||3% (valid till 30th Sep 2017 & minimum S$600 spend per calendar month)||Dining: Weekdays (local)||3%|
|Dining: Weekends (local & overseas)||9% (valid till 30th Sep 2017 & minimum S$600 spend per calendar month)||Dining: Weekends (local)||6%|
|Telco: Starhub only||1% (capped at S$100 spend per month)||Telco (Recurring):||3%|
|Health: Watsons only||3%|
|Utilities: SP Group||1% (capped at S$100 spend per month)|
In my opinion, CDA bank should be selected based on the additional card benefits for CDA-trustee. This is because the CDA money will be used up quickly. Pediatrician consultation fees, infant-care fees and child-care fees which can be paid using CDA money chalks up very fast.
This will leave us to choose between only DBS/POSB and OCBC because UOB does not offer any additional card benefits for CDA-trustee. Therefore, the deciding factor is the parents’ preference to use OCBC 365 Visa or POSB Everday credit card.
Personally, I will choose the OCBC 365 Visa credit card. Firstly, OCBC 365 gives cash rebates in categories without merchant-specific restriction. For instance, OCBC Visa gives rebate for any petrol station and any grocery store, but POSB Everyday is restricted to SPC and Sheng Siong respectively. Secondly, the flexibility to go the any merchant within the category is more useful to me. Howver, do note that POSB Everyday credit card offers higher cash rebates for its merchant-specific categories (6% for SPC vs OCBC 365’s 5% for any petrol station and 5% for Sheng Siong vs OCBC 365’s 3% for any grocery). Thirdly, POSB Everydays’ cash rebate for medical spend is promotional only (13 July 2017 to 31 Jul 2018, OCBC 365’s cash rebate for medical spend is not a promotion.