Financial Series: What is an SDA?

SDA stands for Special Deposit Accounts. They are most similar to time deposit (TD) accounts offered by banks in which they have specific maturity dates (e.g. 30, 60, 90 days) and they have higher interest rates (>4%) than most regular savings accounts. What makes it special is that though it is a deposit account offered by various commercial banks, it is not really those banks that are accountable for it but the Central Bank; and it has relatively higher interest rates than TDs (in this case, TDs of commercial banks and not TDs of rural banks). The banks are just the media used by the Central Bank to reach investors. That is why you cannot see banks advertising SDA packages, not even all tellers know about it. Usually, if you inquire for one, it’s either you will be asked, “Ano po yun, sir?” (What is that, sir?) or you will be forwarded to their manager or anyone who has the idea.

SDA is considered to be one of the better investment vehicles in the market. However, SDAs interest rate has decreased through time which made it not that appealing anymore. But still, this is a better option than just putting your excess money in regular savings accounts.

SDAs are not insured by PDIC but it is virtually safe considering the investee is the Central Bank. They are not that liquid considering they have to be invested on the preferred number of days. You have the option to roll-over the investment, meaning to reinvest the capital together with the gained interest for another term, research compound interest topic and know what I am trying to say. SDAs also have high initial investment amount, at least 1 million. I only know of BPI (Bank of the Philippine Islands) offering as low as 100,000.00 and lately they even reduced that to 50,000.00.

So instead of letting your money sleep in the regular savings account, try SDA and see your money grow over time.