Is Your Money Ok?
Planning For The Future Financial Literacy Month is the perfect time for Canadians to learn about deposit insurance. Having your finances in a CDIC member institution will help ensure your money is always protected.
o you worry about the safety of your money? Take comfort in knowing that CDIC has been protecting Canadians’ hard-earned savings for 50 years. In that time 43 banks have failed in Canada, affecting more than two million depositors. No one lost a single dollar of deposits protected by the Canada Deposit Insurance Corporation (CDIC).
If you are unfamiliar with deposit protection, don’t worry. Financial Literacy Month is a good time to start learning! CDIC is the federal Crown corporation that protects the savings of Canadians in the event their bank fails. If you have eligible deposits held in Canadian dollars at a CDIC member institution, you are automatically protected to at least $100,000. Some 80 financial institutions across Canada are members of the CDIC, including banks, federally regulated credit unions, as well as loan and trust companies and associations governed by the Cooperative Credit Associations Act that take deposits. For a full list of members, go to cdic.ca.
You don’t need to sign up
Deposit coverage is automatic for eligible deposits in Canadian dollars at CDIC member institutions.
You don’t have to pay
CDIC is funded through annual premiums paid by its member institutions, not by depositors or tax dollars.
How it works
Whether you are new to the workforce or planning for retirement, it’s important to know how deposit protection works so you can make informed decisions when managing your savings. While it is true that deposit insurance is automatic, it’s important to know that some things are not covered. It’s also helpful to know that there are ways to maximize your protection within the same member institution.
CDIC automatically protects eligible deposits to a maximum of $100,000, including principal and interest, in each of seven deposit categories such as RRSPs, TFSAs, joint and trust accounts. Joint accounts are treated as one account, rather than separately for each depositor. Trusts are the opposite, where each beneficiary is eligible for up to $100,000 separately, provided certain disclosure rules are met. Eligible deposits include savings and chequing accounts, term deposits like GICs with a term to maturity of five years or less, money orders, bank drafts, and certified cheques.
What’s not protected
But some things are not protected. What’s not covered includes securities and investments, like foreign currency or US dollar accounts, stocks and bonds, mutual funds, and term deposits longer than five years. Additionally, deposits made at different branches of the same institution aren’t covered separately.
What it means for you
“It’s important for Canadians to know about CDIC deposit protection so they can make informed decisions about the safety of their money,” says Michèle Bourque, President and CEO of CDIC. “We’re ready to protect Canadians in case any of our member institutions fails — regardless of size.” “The vast majority of depositors in Canada are protected,” says Bourque. “If their bank is closed, CDIC would give depositors access to their money in a matter of days.”
The next time you visit your branch or meet with your financial advisor, ask about deposit insurance or visit cdic.ca.