Having children’s never easy, especially with Singapore’s high cost of living.
To mitigate the cost, the government rolled out the Baby Bonus scheme, where cash rewards are given to encourage Singaporeans to have more children. With the Baby Bonus, parents will need a Child Development Account (CDA) to receive grants and cash rewards from the government.
So how does the CDA work? Is there a way to make the most of it?
Here’s a quick guide on how to maximise your child’s CDA account, to get the most out of your Baby Bonus rewards!
TL;DR: How To Maximise Your Child’s CDA Account
- Open your CDA with a bank with high interest rates
- Max Out the Government’s Dollar-For-Dollar Match
- Buy an Integrated Shield Plan that is MediSave-Approved for your child
- Use your child’s CDA to pay for a bulk of his/her expenses
What Is The Child Development Account (CDA)?
The CDA is a special savings account for children that can be opened with POSB/DBS, OCBC or UOB, to help build up the savings that can be spent on approved uses. The child will receive CDA benefits:
What Does My Child Get For Opening A CDA Account?
When you open a CDA Account for your child, you will receive the following benefits:
1. Cash Gift
Your child will be getting either $8,000 (for 1st and 2nd child), or $10,000 (3rd child onwards) when he/she is born. This can be paid to any bank account that you wish, or it can be deposited into your CDA.
2. Baby Bonus First Step Grant
On top of the cash gift, you will be getting another $3,000 that will be deposited into your child’s CDA.
3. Dollar-for-Dollar Matching of Savings
For those who didn’t know, the government also matches every dollar you save into your child’s CDA account. Meaning if you deposit $3,000 into your child’s CDA account, the government will deposit $3,000 into the same account as well! There is, however a cap of $3,000 (1st/2nd child), $9,000 (3rd, 4th child) and $15,000 (5th child onwards) on the dollar-for-dollar matching scheme.
As an overview, here’s a quick look on how much Baby Bonus you can get from the government:
|Baby Bonus||Payout (1st, 2nd Child)||Payout (3rd, 4th Child)||Payout (5th Child Onwards)|
|Cash Gift (Any Bank Account)||$8,000||$10,000||$10,000
|First Step Grant (CDA)||$3,000||$3,000||$3,000
|Dollar-for-Dollar Matching (CDA)||$3,000||$9,000||$15,000
How To Maximise Your Child’s CDA Account?
1. Open your CDA with a bank that gives you the highest interest rates
There are a few banks that you can choose to open a CDA account for your child. It is wise to compare these different bank accounts, so that you will choose one that reaps the highest interest rates for your child.
Here we did a quick comparison of POSB, OCBC and UOB’s CDA account:
2. Max Out the Government’s Dollar-For-Dollar Match
As mentioned above, the government does dollar-for-dollar matching when you top up your child’s CDA account. Here’s the maximum you can top up to maximise this benefit:
|Maximum Amount You Can Deposit To Receive $-$ matching||Dollar-For-Dollar Matching||Total in Child's CDA Account|
|1st, 2nd Child||$3,000 per child||$3,000 per child||$6,000|
|3rd, 4th Child||$9,000 per child||$9,000 per child||$18,000|
|5th Child Onwards||$15,000 per child||$15,000 per child||$30,000|
3. Buy an Integrated Shield Plan that is MediSave-Approved for your child
An integrated shield plan is an add on to your MediShield Life insurance plan. It offers additional benefits from private insurers that can help cover large hospital bills and selected costly outpatient treatment.
Having your child covered at a young age is beneficial, as he/she will not be excluded from any pre-existing conditions. With the dollar-for-dollar matching, you are essentially only paying for half the premiums!
So why not use MediSave to pay for an Integrated Shield Plan?
Of course, your child will also receive his/her MediSave account with $4,000 given by the government. While you can use your child’s MediSave, it is much better to use his/her CDA account, as keeping your money in your MediSave account reaps you a higher interest rate (5%) as compared to the CDA account (2%).
4. Use your child’s CDA to pay for a bulk of his/her expenses
If you decide to max out the dollar-to-dollar matching scheme, you will be having ~$9,000 in your child’s CDA (assuming this is your 1st/2nd child). Your child’s CDA can only be used in a list of approved expenses, some of which include:
- Paying for approved Childcare Centres and Kindergartens
- Medical-Related Expenses for your child
- Multi-Vitamins, health supplements
- Optic care, spectacles, and contact lenses for the child.
What Happens To My Child’s CDA Account After He/She Grows Up?
When your child turns 13, whatever money that was not used from his/her CDA account will be automatically transferred to their Post-Secondary Education Account! This account can be used for their post-secondary related school activities. When the time comes, you can find out more about the PSEA account here: