Canadian Deposit Insurance Corporation (CDIC)

What Is the Canadian Deposit Insurance Corporation (CDIC)?

The Canadian Deposit Insurance Corporation (CDIC) is an independent crown corporation established by the Canadian federal government. The CDIC was created by Parliament in 1967 to insure bank deposits of up to $100,000 per insured category as long as they are held in member Canadian banks. Insured categories include checking and savings accounts, certain investments, and foreign currency accounts. The CDIC provides consumers with protection against losses in the event that financial institutions fail.

Understanding the Canadian Deposit Insurance Corporation (CDIC)

The Canadian Deposit Insurance Corporation was formed by Parliament under the Financial Administration Act and Canada Deposit Insurance Corporation Act in 1967 to contribute to the stability of Canada's financial system. It provides consumers with insurance against the loss of deposits in the event of financial institution failure. A bank failure occurs when a bank can't meet its financial obligations because of insolvency or illiquidity.

The CDIC is similar to the Federal Deposit Insurance Corporation (FDIC) in the U.S. It is funded by premiums paid by member institutions. As such, it doesn't receive any public funds to operate. Canadians don’t have to apply for coverage at CDIC member banks, nor do they have to file a claim if there is a bank failure. CDIC insurance pays out members automatically if a member institution defaults.

The agency insures eligible deposits as well as interest within days that are held in member banks, including:

• Checking accounts
• Savings accounts
• Tax-free savings accounts (TFSAs)
• Guaranteed investment certificates (GICs) and other term deposits that mature in five years or less
• Money orders, bank drafts, and checks certified issued by CDIC members
• Foreign currency accounts, such as those held in U.S. dollars
• Deposits held in certain retirement accounts, such as registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs)
• Deposits held in registered education savings plans (RESPs) and registered disability savings plans up to $100,000 per beneficiary as of April 2022

Financial products that aren't eligible for coverage include mutual funds, money market funds, stocks, bonds, exchange-traded funds (ETFs), digital and cryptocurrencies, travelers' checks, treasury bills, bankers’ acceptances, principal-protected notes, debentures issued by banks, governments and corporations, and deposits held at non-member institutions.

Special Considerations

Consumers should consider whether their financial institution is a member of the CDIC. Membership provides depositors with some insurance against losing their savings.

The CDIC's member institutions include the country's largest banks, including:

• The Bank of Montreal (BMO)
• The Canadian Imperial Bank of Commerce (CM)
• The Bank of Nova Scotia (BNS)
• Royal Bank of Canada (RY)
• TD Canada Trust (TD)
• National Bank of Canada (NA)

The CDIC also insures deposits at certain regional banks, such as Canadian Western Bank, First Nations Banks, Laurentian Bank, and Valiant Trust Company. International banks with Canadian branches, such as ICICI Bank and the Bank of China, as well as non-traditional banks like PC Financial are also members.

Deposits at federal credit unions are covered under the CDIC. Those held at provincial credit unions are not covered. These institutions are covered by provincial deposit insurers. Money held in member institution branches outside Canada is not covered. Deposits held at financial institutions outside Canada are not covered either. So if you have an account at Bank of America in Florida, your money isn't protected under the CDIC. It may be covered by the FDIC.

Example of Canadian Deposit Insurance Corporation Coverage

CDIC coverage may seem a little confusing, especially if you have multiple deposits in different accounts across many different institutions. Let's say you have the following accounts:

• Checking account at CIBC: $12,000
• Joint checking account with your spouse at Scotiabank: $5,000
• Savings account at TD Canada Trust: $25,000
• Emergency fund at Ontario Provincial Police Association Credit Union: $3,000
• TFSA at PC Financial: $75,000
• RRSP at BMO: $135,000
• Mutual fund account at National Bank: $55,000

Using the list above, we can determine that you are covered for the following under the CDIC:

• Checking account at CIBC: $12,000
• Joint checking account with your spouse at Scotiabank: $5,000
• Savings account at TD Canada Trust: $25,000
• Tax-free savings account at PC Financial: $75,000
• RRSP at BMO: $100,000

Your emergency fund at the OPP Association Credit Union isn't covered by the CDIC because it falls under the provincial deposit insurer in Ontario. Your mutual fund account and the remaining balance in your RRSP aren't covered either. Note that if you had $200,000 in your joint account with your spouse, then the agency would cover $100,000 for each of you.