What Exactly Can You Do With Your Child’s Baby Bonus Child Development Account (CDA)?


Joanne Poh



If you’re a parent who’s reeling at the price of childcare and later, tuition, you need all the help you can get. Recently, it was announced that DBS, UOB and the existing OCBC are going to be administering the Child Development Accounts, taking over from Standard Chartered. Of course, all that is meaningless to you if you have no idea what you can use the CDA for in the first place.

Here’s a rundown of how you can get free money from the government thanks to the CDA and what you can use it for.


Double your savings for your child with the baby bonus

In order to receive the famous Baby Bonus, you will need to open a CDA. Basically, any money that you save up for your child and deposit in the CDA will be matched one-for-one, up to a maximum that is determined according to how many children you have as follows:

  • First child: $6,000
  • Second child: $6,000
  • Third child: $12,000
  • Fourth child: $12,000
  • Fifth child and above: $18,000

That means if you deposit $1,000 into the CDA, the government will give you an additional $1,000 the next month. You get to keep your CDA account open until your child hits the age of 12, so you’ve got quite a bit of time to save up the amount necessary to bag you the entire bonus.


Kickstart your savings with the CDA Starter Scheme

If you have a monthly household income of under $4,500, definitely sign up for the CDA Starter Scheme as there’s more free money coming your way. If you deposit at least $50 into your account, over a period of 6 months the bank (currently available at OCBC) will contribute double that amount. The government will then match the total amount.

Here’s how it works. You deposit $50. The bank gives you $100 in return. Altogether you have $150 now. The government then matches that by giving you an additional $150. Voila, your $50 deposit has ballooned to $300.


Enjoy a decent interest rate

The main reason most people open a CDA is to take advantage of the baby bonus. But the CDAs at the various banks also offer fairly high interest rates. POSB, OCBC and UOB are all currently offering rates of 2.0% per annum on the account balance.

For POSB, the 2.0% interest rate is only for up to a maximum balance that depends on how many children you have, after which it defaults to 0.05%. OCBC caps the 2.0% interest rate at a maximum balance of $36,000, after which it defaults to 0.05% as well. UOB, on the other hand, has no balance cap to enjoy the 2.0% interest rate.

When you consider the fact that you’re getting that interest not only on your own deposits but also on all the money the government gives you to match, it’s a pretty good deal.


Spending the money in the CDA account on childcare, healthcare and early childhood services

You might have amassed a small fortune in your CDA, but that doesn’t mean you can withdraw the entire amount and try to triple it at the MBS casino. The money in your CDA is supposed to be spent on your child, and can only be paid out to the following service providers:

  • Child care centres
  • Kindergartens and special education schools registered with the MOE or CPE
  • Early intervention programmes registered with the NCSS or Centre for Enabled Living
  • Healthcare institutions
  • Assistive technology device providers (eg. for hearing aids)
  • Optical shops
  • Pharmacies

Basically, this means you get to use the money in your CDA account for childcare, early childhood or other special needs programmes, as well as healthcare for your child. And we all know how expensive all these things can get.

Note that all institutions must be registered with the MCYS under the Baby Bonus Scheme. So before you use any of their services, make sure you check that they’re an approved institution or you won’t be able to use money from your CDA to pay.

What have you used your CDA account for? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.

  • Jackson

    So what happens to the money if it’s not spent after the child is 12 years old?

    • Regina Xie

      it goes to the child’s post-secondary education account, which can be used to pay local uni/poly fees. otherwise, it will go into your child’s CPF when he/she is 30 years old. google “cda psea” to find out more.

      • April

        Hi – Thanks for this info. I was just wondering on how did you compute the 24k?

  • PW Siah

    Hi Joanne, is there any other conditions require in CDA Starter Scheme? Must have OCBC certain Credit Card?

  • Asweni

    Actually we are in overseas ..izit possible to use my daughters baby bonus nets card over here..

  • Tisha

    Hi, would like to ask some opinions here.
    I had open an cda for my daughter before divorcing few months later. As I had open up, i became the trustee of the cda. However, due to personal reasons with my ex spouse, would like to totally cancel the cda. Emailed to msf, but rejected being the reason that the sole custody was my ex spouse. How and where can i seek help on this. Thank you.

  • nathalielim

    If the funds in the cda is running low, can we deposit money into the account, for childcare to deduct?