What’s The CDIC And How Does It Protect You?

A surprising thing happened during the pandemic: we turned into a nation of savers. 

In 2019, an analysis of data from the Organisation for Economic Co-operation and Development (OECD) put Canadians in the bottom half of all OECD nations for the percentage of disposable income we put into savings, with Americans saving three times more, on average.

But the pandemic changed everything—including the state of our bank accounts. Whether to prepare for unforeseen circumstances or because of a lack of opportunity to spend on entertainment, restaurants and travel, the Bank of Canada indicated that savings swelled by $5,800 for the average Canadian over the course of the first year of the pandemic.

Having more money to fall back on should bring peace of mind. But feeling confident in your savings comes from knowing that whatever happens, that money will be there when you need it. Most of us assume if we put it in the bank, it will be safe.

To a large extent, that’s true. In fact, the Canada Deposit Insurance Corporation (CDIC) plays a unique role in providing this assurance to Canadians.

The banking industry is highly regulated to keep banks resilient. While you may have looked into your bank’s policies regarding fraud protection or cybersecurity, you may not have considered what happens if your banking institution itself fails. If your bank goes under, what happens to your money? 

That’s where the CDIC comes in. The CDIC is a Crown corporation that automatically insures eligible deposits so that in the event of a bank failure, Canadians’ money is protected. However, because not all deposits are eligible, it’s important to understand the ins and outs of deposit insurance.

For starters, it’s a good idea to get familiar with what is—and isn’t—covered. Funds in savings and chequing accounts, Guaranteed Investment Certificates (GICs) and other term deposits, and money held in foreign currency accounts are all eligible, while investment products such as stocks, mutual funds, ETFs and cryptocurrency are not. 

There are also seven eligible categories—for example, accounts in one individual’s name, joint accounts, RRSPs and so on—each with its own $100,000 limit per member bank. (Deposits at each different bank are insured separately—and not subject to a cumulative limit—but accounts in the same category, held at the same financial institution, are cumulatively capped at $100,000.) 

You don’t have to sign up for CDIC’s coverage; you don’t even have to be Canadian to qualify. You just have to keep your funds in an eligible account at a CDIC member institution.

That’s why it’s important to check the CDIC member registry or confirm with your financial institution before making a deposit. What’s more, this protection comes at no charge to deposit account holders. Member financial institutions, including banks, federally regulated credit unions, and loan and trust companies pay the premiums on deposit insurance. 

This financial security is critical—not just for individuals but for the health of the economy as a whole, given the potential rippling effects of a bank collapse. And it’s a system that works: since its inception in 1967, CDIC has handled 43 bank failures affecting more than two million depositors. Not a single dollar under CDIC protection has been lost. 

So feel confident about growing your savings—just make sure they’re insured by the CDIC.