Personal Investor: Ottawa beefs up deposit insurance
Canada’s deposit insurance is getting beefed up to keep up with the times. Many Canadian savers might not know the federal government already insures up to $100,000 in savings in the event a member financial institution fails. Just about every Canadian financial institution pays into it, and that’s why they rarely fail.
But they can fail, and that’s why Ottawa is expanding deposit insurance over the next two years. Here are the key changes, which will come into force in two phases, beginning April 30, 2020:
- The five-year term limit on coverage for guaranteed investment certificates (GICs) will be removed now that longer-term GICs are available.
- Coverage will be included for foreign currency deposits as more Canadians keep their cash in U.S. dollar accounts.
- Coverage will be extended beyond registered retirement savings plans (RRSP) and tax-free savings accounts (TFSA) to other registered accounts, including Registered Education Savings Plans (RESP) and Registered Disability Savings Plans (RDSP).
- Travellers’ cheques will no longer be covered since member institutions no longer issue them.
It’s important to know that the Canada Deposit Insurance Corporation (CDIC) covers savings and chequing accounts, GICs or other term deposits, money orders, certified cheques, bank drafts, and accounts that hold realty taxes on mortgaged properties.
It does not cover stocks, bonds, or investment funds.