A Primer on Deposit Insurance

Deposits placed with Canadian regulated banks and credit unions are generally insured by the Canadian Federal Government or a Provincial Government, depending on where the bank or credit union is organized.

Federal Deposit Insurance: Canada Deposit Insurance Corporation

Deposits placed with Federally regulated banks are insured by the Canada Deposit Insurance Corporation (CDIC)

Deposits placed with Provincially regulated banks or credit unions are guaranteed by Provincial governments. 

The terms are conditions of the insurance or guarantee vary by government agency.  CDIC, for example, insures the following:

  • deposits in Canadian dollar or foreign currency
  • Guaranteed Investment Certificates
  • other term deposits,

in an aggregate amount of up to $100,000 per “deposit category”. The rules regarding coverage and what is a “deposit category” can be technical and the CDIC has a very helpful list of FAQs.

Provincial Deposit Insurance

Some of the accounts listed by Mr Thrifty are offered by Manitoba and Ontario credit unions, whose deposits are guaranteed by The Deposit Guarantee Corporation of Manitoba and the Financial Services Regulatory Authority of Ontario (FSRA), respectively. 

The Deposit Guarantee Corporation of Manitoba provides an unlimited guarantee of all deposits in a Manitoba credit union or caisse populaire, including accrued interest to date of payout. 

FSRA (successor to the Deposit Insurance Corporation of Ontario) insures individual deposits up to $250,000 (unlimited for deposits in registered plans, such as RRSPs and TFSAs). The definition of “deposits” includes not only bank accounts but also term deposits and GICs, registered plans like RRSPs and RRIFs, and TFSAs. See the full list here. Note that foreign currency deposits are not eligible for FSRA insurance.

The differences in insurance coverage between the CDIC and provincial coverage may be meaningful to you if you have a large sum of money to invest.  The sad reality is that deposit insurance exists for a reason: banks and credit unions do, occasionally, fail.  In such a circumstance you never want to have your hard-earned money at risk — so be careful and stay insured ! 

This article is intended to be a primer for educational purposes only and is not intended to be a comprehensive summary of insurance coverage. Mr Thrifty recommends that you read the fine details of CDIC or Provincial deposit insurance coverage before opening a deposit account.

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