In Canada most savings deposits are covered by the Canada Deposit Insurance Corporation (CDIC) which is paid for by premiums from member institutions and backed by the Federal government of Canada. This means that your savings are as safe as the Canadian governmentís credit rating - one of the most prudently run governments in the developed world backed by a vibrant resource based economy.
How it works
The maximum amount covered is $100,000 on a per bank basis. Both interest that has accrued on your account as well as the principle deposit are covered. A non-resident investor has the same coverage as a resident investor.
The Canada Deposit Insurance Corporation automatically covers eligible savings accounts, so there is no need to sign up. All you need to do is make sure that your institution and account type is covered by the Canada Deposit Insurance Corporation.
If you have some funds in a guaranteed account but some in the non-guaranteed accounts then the guaranteed accounts will still be covered. So if you have $5,000 in a savings account and $2,000 in a mutual fund then the $5,000 will still be covered.
There are special rules for joint accounts and trusts.
The following accounts are covered by the Canada Deposit Insurance Corporation for member firms:
Accounts holding mortgaged properties or realty taxes
Debentures issued by members of the Canada Deposit Insurance Corporation
Fixed term certificates of up to five years maturity (see below)
What types of accounts are not covered
The Canada Deposit Insurance Corporation is designed to encourage saving and not speculation. There are also some institutions that can not or will not belong to the corporation. This means that the following types of accounts are not covered by the Canada Deposit Insurance Corporation:
Foreign Currency accounts (including US dollar accounts)
Non Canadian bank accounts, including those held by Canadian branches
Accounts that can not pay out in Canada
Accounts held by those Canadian chartered banks that are not members of the CDIC
Debentures not issued by a member of the CDIC
Fixed term certificates with a maturity of more than five years
Accounts held by Credit unions and Caisses populaires
If you have some funds in a guaranteed account but some in the non-guaranteed accounts then the guaranteed accounts will still be covered. So if you have $5,000 in a savings account and $2,000 in a mutual fund then $5,000 will still be covered.
Donít worry if this is confusing, as we will be able to guide you through the process if you have any questions.
Notes on Special Cases
1. Guaranteed Investment Certificates and Term deposit accounts
If you have Guaranteed Investment Certificates or Term deposit accounts these will be covered if the original term of maturity is five years or less. Term deposit accounts and Guaranteed Investment Certificates with an original term of maturity over five years are not covered.
2. Retirement plans
If you hold funds in a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF) then the coverage is calculated on what is in the underlying holding. So if you have a Guaranteed Investment Certificate of three years and a mutual fund in the retirement fund then the Guaranteed Investment Certificate will be covered but the mutual funds will not be.