The journey of parenting in Singapore is often defined by the meticulous planning and thoughtful decision-making that goes into securing a child’s future. Among the tools provided by the Government to support parents, the Child Development Account (CDA) stands out as a practical and impactful initiative. Designed to encourage early financial investment in a child’s development, the CDA forms part of the Baby Bonus Scheme—a broader suite of policies aimed at alleviating the cost of raising children in Singapore.
Yet, despite its generous benefits, many families may not fully leverage its potential. In this article, we explore not just what the CDA is, but the strategic ways parents can maximise its benefits, making every dollar count towards a brighter future for their children.
Understanding the Child Development Account (CDA)
The CDA is a special savings account set up under a child’s name, where the Government matches every dollar deposited by parents, up to a certain cap. This account can be used to pay for child-related expenses at approved institutions, such as child care centres, kindergartens, special education schools, healthcare providers, and more.
How Much Does the Government Match?
The amount of matching depends on the birth order of the child:
| Child Order | Government Co-Matching Cap |
|---|---|
| 1st & 2nd Child | Up to $4,000 |
| 3rd & 4th Child | Up to $9,000 |
| 5th Child & Beyond | Up to $15,000 |
In addition, every child receives a First Step Grant of $5,000, deposited automatically without requiring parental contribution. This means the account has immediate utility from the moment it is set up.
Why Maximising the CDA Matters
Too often, the CDA is seen as a supplementary scheme rather than a core part of a family’s financial plan. However, maximising the CDA isn’t just about savings—it’s about compounding value, relieving cashflow pressure, and strategically aligning early childhood expenses with support systems already in place.
1. Make Full Use of the Government Co-Matching
Perhaps the most obvious—yet underutilised—method to maximise the CDA is to contribute enough to trigger the full government co-matching.
For example, if your child is your second-born, depositing $4,000 into the CDA would unlock an additional $4,000 from the Government. That’s an instant 100% return on your money, which no bank or investment can match with such certainty.
Tip: Contribute early. The sooner the funds are deposited, the sooner they can be used for qualifying expenses or grow via interest.
2. Use CDA to Offset Recurring Expenses
The CDA can be used for a wide range of recurring child-related expenses, reducing monthly out-of-pocket payments. Eligible uses include:
- Childcare and kindergarten fees
- Medical and dental services at approved healthcare institutions
- Early intervention programmes
- Premiums for MediShield Life or Integrated Shield Plans for your child
- Assistive technology devices and services for children with special needs
Using the CDA for these everyday expenses means you are effectively paying half the cost—because of the matching funds. Parents can then reallocate those savings toward other long-term financial goals such as university education or family insurance.
3. Treat the CDA as an Emergency Reserve for Child Healthcare
Medical expenses for children can arise unexpectedly. Whether it’s dental surgery or specialised treatment for developmental delays, these costs can be significant.
By contributing proactively to the CDA, you’re building a dedicated emergency reserve—one that is not only matched by the Government but can also relieve you of panic-driven borrowing or reliance on personal savings in times of need.
What’s Covered?
All bills at approved medical institutions, including:
- KK Women’s and Children’s Hospital
- National University Hospital (NUH)
- Polyclinics and many GP clinics under the CHAS scheme
4. Take Advantage of CDA-Compatible Insurance
One little-known yet highly strategic use of CDA funds is for paying MediShield Life premiums, and in some cases, Integrated Shield Plan riders (ISPs) for your child. These health insurance plans cover hospitalisation bills and serious illnesses. For Integrated Shield Plans, several insurers allow premiums to be paid from the CDA.
This is a prudent way to safeguard your child’s long-term health while optimising government-matched savings.
5. Consolidate Child-Related Purchases at Approved Institutions
The CDA can only be used at approved institutions—but that list is longer than many parents realise.
Some private education centres, therapy providers, and even optical shops or pharmacies (such as Unity and Guardian at specific outlets) accept CDA payments. This includes:
- Speech and language therapy sessions
- Learning support for children with special needs
- Nutritional supplements or prescription spectacles
Hence, planning where to shop or seek services can ensure more CDA funds are being utilised instead of personal cash or other savings.
Find Approved Institutions: Use the Baby Bonus Approved Institutions Search tool provided by the Ministry of Social and Family Development (MSF).
6. Earn Interest on CDA Funds
While the CDA is not an investment account, funds in the CDA earn interest of up to 2% per annum—better than many standard savings accounts in Singapore.
Participating banks (OCBC, DBS, UOB) may offer different rates or even promotions. For example:
- OCBC and DBS both offer tiered interest for balances above certain thresholds.
- Some banks offer bonus interest or additional perks when you maintain higher CDA balances or open a joint savings account.
Though modest, this interest still means your savings are growing in a risk-free environment.
7. Open a POSB/OCBC/UOB CDA-Ecosystem Account for Bonuses
All three local banks in Singapore—POSB/DBS, OCBC, and UOB—provide CDA accounts, each with their own partner benefits and ecosystems. Choosing wisely can unlock extra value.
Examples:
- OCBC CDA: Links to OCBC Mighty Savers for joint saving plans with parents.
- DBS CDA: Connects with POSB Smiley CDA programme and comes with bonus interest schemes and perks like discounts on childcare and enrichment classes.
- UOB CDA: Offers tie-ins with UOB Child Development Savings Account for building long-term deposits.
Explore the ecosystem perks when selecting a CDA provider. In some cases, siblings can also benefit from shared promotions or linked savings plans.
8. Coordinate with Grandparents and Relatives
Anyone can contribute to the CDA—not just parents. This makes it an excellent tool for meaningful gifting by grandparents, godparents, or even friends.
Encouraging relatives to contribute towards your child’s CDA instead of gifting toys or ang bao money on birthdays or festive occasions allows the funds to go further, especially when matched by the Government.
9. Plan CDA Usage Over Time
One strategic mistake parents make is spending the CDA funds too quickly. While it’s tempting to use it immediately for childcare or medical bills, consider pacing the usage over several years—especially for things like:
- Primary school enrichment programmes
- Learning or behavioural therapy
- Assistive devices as the child grows older
Think of the CDA not as a one-time boost, but as a 10–12 year fund that should be stewarded across developmental stages.
10. Continue Saving Beyond the CDA Cap
Once you hit the Government co-matching limit, further deposits will not be matched. However, this does not mean you should stop saving. Consider:
- Opening a child savings or investment account for education planning
- Using CDA-linked savings products offered by banks to extend the habit of regular contributions
If you’re already in the rhythm of monthly CDA top-ups, redirecting that amount to a junior investment plan or endowment fund ensures your child’s financial foundation continues to grow.
Conclusion: A Long-Term Perspective
The Child Development Account is more than just a savings vehicle—it is a cornerstone of Singapore’s family-oriented social policy, aiming to encourage early financial stewardship and accessible developmental support for children.
By proactively contributing to and smartly utilising the CDA, parents can significantly lighten the financial burden of raising a child, while simultaneously building a foundation of care, preparedness, and opportunity.
Ultimately, the CDA reflects an empowering principle: that a child’s growth is not just a personal journey, but a national investment. And when used wisely, it can be one of the most powerful tools in a parent’s financial toolkit.