Just how safe is your money?
The Taiwanese government is debating whether or not to renew its deposit guarantee scheme after the recently instituted protection expires at the end of the year. Could the same thing happen here?
Highly unlikely. In fact, the coverage offered in Canada on 'safe' investments is really the gold standard around the world.
The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation that insures Canadians’ savings in case their bank or other CDIC member institution fails or goes bankrupt.
CDIC, however, isn’t itself a bank nor is it a private insurance company. Premiums from member firms finance the fund, backed up by available monies from the federal government.
Right now, the maximum CDIC protection for eligible deposits in Canada is $100,000 per person (prior to 2005, it was just $60,000 however).
Of course, CDIC isn’t the only level of protection available. Credit union deposits in Ontario, for instance, are covered up to $100,000 by the Deposit Insurance Corp. of Ontario. Other credit unions across the country offer similar coverage through parallel provincial Deposit Insurance Corporations.
Provided you invest with a member institution, CDIC coverage applies to savings accounts and chequing accounts; GICs or other term deposits of five years or less; money orders, certified cheques, bank drafts; and accounts that hold realty taxes on mortgaged properties.
It doesn’t cover accounts denominated in foreign currencies; mutual funds, stocks, bonds or treasury bills; or GICs or other term deposits of five years or more.
Essentially, the Corporationinsures deposits in several different categories, which means you may actually be insured beyond the $100,000 limit in some circumstances. CDIC has a useful Deposit Insurance Calculator if you want to see if you’re covered under multiple accounts.
If you’re worried that your deposits might be over these limits, then spread things around within different institutions you’re dealing with. Many banks have a number of different organizations working within the same firm, each of which is CDIC-insured, for instance.
Are you confident that your deposits are safe? Have you taken any extra steps to protect yourself?
-- by Gordon Powers, MSN Money
