As parents, there’s so much to think about when raising a child-childbirth costs, feeding, paed’s visits, caregiving, education, and more.

Let’s be honest, all these require money and they aren’t exactly cheap in Singapore. Fortunately, the government recognises the importance of early financial planning for our mini me’s education and healthcare needs. Parents can open a Child Development Account (CDA), which is designed to assist families in saving for their children’s future.

What is a Child Development Account (CDA)

Your bubba’s CDA is essentially a co-savings account which will receive government grants and parental top-ups. It acts like a regular bank account (though with slightly higher interest rates), with the funds used for your child’s school fees, medical expenses, and more. You can save into and use the CDA until 31 December of the year your child turns 12 years old. Any unspent balance then simply goes to their Post Secondary Education Account (PSEA). Your bub qualifies for a CDA if: He/She is a Singapore Citizen and His/Her parents are lawfully married.

Children of unwed parents may be eligible for CDA benefits only if they are born on or after 1 September 2016.

Grants Available in the Child Development Account (CDA)

Here are the grants daddies and mummies can get once they open a CDA. Who doesn’t love free money from the government, amirite?

1. First Step Grant

The First Step Grant is automatically deposited into your child’s CDA without you having to deposit any funds first. Parents with kids born after February 14th 2023 will receive S$5,000. As for children born on or after 24 March 2016 to 13 February 2023, they will receive S$3,000 for their First Step Grant. Sadly, there is no First Step Grant available for kiddos born before 24 March 2016. However, they can still receive the government’s dollar-for-dollar co-matching account contribution so parents ought to take advantage of that.

2. CDA Account Dollar-for-Dollar Matching

For every dollar you save in the Child Development Account, the government adds another matching dollar, up to S$4,000 for your first child and even more for your second child onwards.

If you have liquid cash on-hand, it’s best to top up the maximum amount to your child’s CDA from the very beginning as the funds will be accruing interest from Day One.

What Can the Child Development Account (CDA) Be Used For

The CDA provides daddies and mummies flexibility in how the funds can be utilised.

Whether it’s for childcare expenses or educational resources, the monies inside the CDA can be used at any Baby Bonus Approved Institutions, including:

• Fees for registered childcare centres, kindergartens, early intervention programmes, and special education schools.
• Medical expenses at healthcare institutions like hospitals and General Practitioner clinics.
• Purchase of selected items at pharmacies.
• Premiums for MediShield Life or MediSave-approved private integrated plans. If the premium is paid by MediSave, there must be cash top-up to MediSave before the CDA can be used to reimburse the parent. Note that the rider can’t be paid using CDA
• Optical appliances, eye care products and services.
• Assistive Technology Devices (ATD).

Which Bank Should You Choose For Your Baby’s Child Development Account (CDA)

You can easily open a CDA for your child at one of the local banks in Singapore— DBS/POSB, UOB, or OCBC. No matter which one you choose, your child will still receive the CDA First Step Grant and the government’s dollar-for-dollar matching for the savings.

The only difference are the interest rates and other benefits, shown in the table below.

So, which bank should you choose when opening your baby’s CDA? OCBC offers the highest interest rates of 1.2% p.a. when you save the first S$10,000 and a whopping 2.4% p.a. when you save more than S$10,000. This bank also offers the best perks, with exclusive deals from over 15 merchants. The good thing is that you can always switch to another bank should you wish to do so. Simply submit an application on the Baby Bonus website.

How to Open a Child Development Account (CDA) in Singapore

Opening a CDA can be done as early as eight weeks before the estimated date of delivery (EDD).

Here’s a step-by-step guide.

• Step 1: Join the Baby Bonus Scheme and apply for a CDA via the Baby Bonus website.

• Step 2: Login with your Singpass and fill in your information. You don’t have to provide your bub’s birth date if he/she is not yet born-an estimated EDD is sufficient.

• Step 3: Provide the bank account number that will receive the cash gift from government as part of Baby Bonus Scheme. Take note this is the parent’s own bank account number. It can also be different from the bank that you plan to open a CDA with.

• Step 4: Choose the bank that you intend to open a CDA with. You will then receive a confirmation from MSF.

• Step 5: For parents who are pre-registering, your child’s CDA will be opened within 3-5 working days of your child’s birth registration with ICA, or after your child’s enrolment into Baby Bonus Scheme, whichever is later.

With so many things to do after baby’s birth, it’s best to complete those that can be done first. Being kiasu and registering for their CDA early is not exactly a bad thing. It’s a great avenue to deposit your bub’s first angpao money and start saving for their future!