CDIC Insurance | How your CDIC limit works

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Several people have reached out to me recently with questions about the Canada Deposit Insurance Corporation (CDIC). More specifically, they’ve asked me about my thoughts on the CDIC limit of $100,000 as they feel that it’s a bit low considering how much money they have in their accounts.

It’s a reasonable consideration for someone who has built up a significant amount of savings. As many people keep their money and investments at a single financial institution, exceeding $100,000 can happen.

So, I thought I’d shed a little light on the topic. While the CDIC coverage limit might be $100,000, this applies to eight different coverage categories, which means you could have up to $700,000 of protected deposits at a single financial institution (or more, if you have multiple joint accounts for example). Maximizing your CDIC limit is easy once you understand how it all works.

CDIC Insurance CDIC limit

What does CDIC insurance cover?

First off, it’s important to note that your financial institution must be a CDIC member for your money to qualify for CDIC coverage. You’ll know that you bank with a CDIC member if you see the purple logo posted on your financial intuition’s banking app, online banking website or automated banking machines, or displayed on the door of your financial institution branch. Assuming that’s the case, the following is covered:

  • Chequing and Savings accounts (including high-interest savings accounts)
  • Foreign currency
  • Term deposits including Guaranteed Investment Certificates (GICs) (no term limits)

As you can see, the Canada Deposit Insurance Corporation covers anything that’s cash based. That means investment products such as bonds, stocks, mutual funds, cryptocurrencies, and exchange traded funds aren’t covered. It’s also worth noting that CDIC no longer covers travellers’ cheques.

What does  CDIC cover?

  • Deposits held in one name
  • Deposits held in more than one name (joint accounts)
  • Deposits held in a Registered Retirement Savings Plan (RRSP)
  • Deposits held in a Registered Retirement Income Fund (RRIF)
  • Deposits held in a Tax-Free Savings Account (TFSA)
  • Deposits held in a Registered Education Savings Plan (RESP)
  • Deposits held in a Registered Disability Savings Plan (RDSP)
  • Deposits held in a trust

Each of the above accounts gives you $100,000 in CDIC coverage – so technically, you could have one of each at the same institution and have coverage on a total of $800,000. Keep in mind that protection on deposits held in joint accounts applies to each set of joint owners, so if you have a joint account with your partner and another with a parent, the deposits in both of those joint accounts would be protected up to $100,000. And remember, this applies to a single financial institution, so if you had a ton of cash you needed to protect, you could always open additional accounts at another CDIC member financial institution.

People often freak out about how deposit insurance in Canada has a $100,000 limit, but as you can see, you’ll likely have more than enough room to cover yourself. If you want to see how your accounts are covered, you can quickly estimate your CDIC coverage with this tool.

How an average family’s money is protected

Okay, so you know that your cash deposits are covered up to $100,000 per qualifying category per member institution. However, CDIC doesn’t cover stocks, bonds, mutual funds or exchange traded funds. What does this mean for your finances? Let’s take a look at one couple and how their finances are set up.

Chequing account – $3,500 TD BankChequing account – $6,000 TD Bank
Joint account – $10,000 TD BankHISA – $20,000 EQ Bank
RRSP – $41,000 – Mutual fundsRESP – $6,000 – JustWealth
RRIF – $25,000 – Cash + GICsRRSP – $62,000 – ETFs
TFSA – $15,000 – CashTFSA – $21,000 – Cash

Together Ethan and Ester, have $209,500 in their various accounts and $100,500 (the bolded items) is protected by CDIC. If you noticed, between the two of them, they’re using three different financial institutions, so they have access to even more accounts that would fall under CDIC protection. The investments that fall outside of CDIC coverage may be covered by the Canadian Investor Protection Fund (CIPF).

There’s no need to worry about your money

Although bank failures are rare, they do happen.  43 CDIC members have failed since CDIC was created with the most recent happening in 1996.  No one wants to see a bank fail, and as Canada’s resolution authority, CDIC has a number of tools to resolve a failing member.

While there is a $100,000 limit per category, as you now know, it applies per category and per member institution. Couples where each individual has a chequing or savings account in addition to a joint account together could have up to $300,000 in coverage and this doesn’t even factor in the other eligible categories held at other financial institutions.

It seems like the biggest fear for people is that they could lose all their money if it’s tied to a single financial institution. Would they lose everything if that member failed? The answer is no. Your eligible deposits are protected at CDIC member institutions.

Final thoughts

The Canada Deposit Insurance Corporation plays a vital role in the Canadian financial services sector. It’s important to understand they are there, working in the background, to ensure your deposited money is safe.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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