What Is CDIC And Why Is It Important?

by Pam on November 22, 2012

What is CDIC?

While some Canadians bank at credit unions, many more deal with the big banks.  The major banks in Canada are all insured by the Canada Deposit Insurance Corporation (CDIC).  So, just what exactly is CDIC?  Well, it’s actually a federal Crown corporation that was created by the Canadian Parliament in order to protect your deposits in case the bank ever happened to go under.

What CDIC is NOT

CDIC is not a private insurance company and neither is it a bank.  The main point of the creation of CDIC is to help keep Canada’s financial system as strong as possible.

Make sure your bank is insured.

Before depositing money into a bank, it is important to find out if they are covered by CDIC.  The big banks are, but if you are thinking about opening up an account at a smaller institution, you should not just assume they are covered.  Remember, if the bank ever failed and the institution was not a member of CDIC, you would lose all your money.  Note, CDIC members will always have CDIC brochures on display at their branch locations, and if you cannot find one, just ask an employee.    You can also check the CDIC website to determine if your bank is insured.

What is NOT covered by CDIC?

Certain deposits that you make will not be insured by CDIC.  Examples include:

1. Deposits in other currencies.  Only Canadian dollar deposits are ensured

2. Deposits in mutual funds and stocks

3.  GICs and other term deposits that have a maturity date of more than 5 years

4.  Bonds

5.  Treasury bills

What is covered by CDIC?

1.  Savings and chequing accounts

2.  GICs and term deposits with a maturity date of less than 5 years

3.  Money orders, certified cheques, traveller’s cheques and bank drafts (issued by CDIC members).

CDIC coverage has its limits, however, that is why it is important for you to understand how CDIC coverage works.  CDIC will insure up to a maximum of $100,000 for selected types of accounts.  They are generous in that they will insure your deposits separately based on different ownership types and based on different types of accounts.  An example would be if you had a GIC for $100,000 in your name and then had another GIC with your brother for $100,000, then they would both be covered.  However, if both GICS were just in your name, you would only have coverage for one of them.

To get more detailed information about what is and is not covered, I would encourage you to visit the CDIC website so that you can have peace of mind on this subject.

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