How to Protect Your Money from Bank Failures in Canada

11/28/24 •

Summaries by topic

• English

Canadian banks have a robust deposit insurance system through the Canada Deposit Insurance Corporation (CDIC), ensuring that depositors haven't lost money in a bank failure since 1967. Although bank failures are rare, CDIC provides coverage up to $100,000 per category per institution, offering a high level of protection for various account types, including personal, joint, and registered accounts.

Bank Failures in Canada

• 00:01:25 The last bank failure in Canada occurred in 1996, with Security Home Mortgage Corporation. Since the CDIC's establishment in 1967, there have been 43 bank failures, yet no depositor has lost money due to CDIC protection. This signifies a strong track record of protecting depositors' funds.

CDIC Coverage

• 00:03:15 The CDIC protects deposits in Canadian or foreign currency, Guaranteed Investment Certificates (GICs), and other term deposits. However, it does not cover mutual funds, stocks, bonds, ETFs, or cryptocurrencies. There is a $100,000 limit per deposit category, per member institution.

CDIC Coverage Categories

• 00:03:59 CDIC coverage is categorized based on account type, with a $100,000 limit per category. The categories include personal, joint, RRSP, RIF, TFSA, RDSP, RP, FHSA, and trust accounts. This allows individuals to maximize their coverage across different accounts and institutions.

CDIC Funding

• 00:02:18 The CDIC is funded by insurance premiums paid by member institutions and has borrowing authority from the Canadian government. The CDIC does not receive any public funding, ensuring its operational independence and financial stability. This system ensures the CDIC maintains sufficient funds to cover potential bank failures.

CDIC Coverage Calculator

• 00:05:20 The CDIC provides a coverage calculator online that allows individuals to input their various accounts and deposit types to see exactly what is covered under CDIC protection. Individuals should use this tool to gain a better understanding of their deposit coverage. This promotes financial transparency and peace of mind for individuals.