Are My Savings Safe in Canada?
Canada is a leading country in terms of banking and investment. The sound financial system of Canada has turned this country into one of the most appealing places to save money and invest. Canada offers reliable short and long term bonds at federal and provincial governments levels. You may also find many other methods of investment such as TSX (Toronto Stock Exchange) stock shares and GIC (Guaranteed Investment Certificate) contracts. Depending on the level of the risk you would like to take and also the size of your investment there are many options offered by Canadian banks and financial institutions for saving and investment.
The credit crunch of 2008-9 which resulted in the failure of many banks and/or financial institutions around the world has raised this legitimate question: “Are my savings safe?” or rather “What could happen if the financial institution I am dealing with goes bankrupt?”.
Due to the strict rules of banking in Canada it is very unlikely that you see a major Canadian bank or financial institution going bankrupt. Nonetheless to make it more appealing the government of Canada has established an insurance system that protect your Canadian savings up to 100,000 Canadian dollars.
Who is in Charge of Insuring Savings in Canada?
Canada Deposit Insurance Corporation (CDIC) is a federal government organization that insures your savings if they meet certain conditions.
- The account is eligible (for example savings, chequing, and GICs of 5 years or less)
- The bank or financial institution is covered
- The savings are in Canadian dollars
Is My Financial Institution Included?
If your financial institution or bank is a CDIC member then it is very likely that your savings are insured. Click here to see an up-to-date listing of CDIC members.
Are My Savings Covered by CDIC?
You need to contact your financial institution to make sure that your savings are covered by CDIC. The rule of thumb is that saving accounts, chequing accounts, and GIC contracts of 5 years or less with CDIC member institutions are covered. I, however, strongly suggest that clarify this matter with your bank. Remember that the maximum limit of coverage is $100,000. You do not need to pay a premium to be eligible for this coverage.