Is your money safe? - MoneySense

Is your money safe?

Information on RESPs and other types of deposits that aren’t insured.


Young couple at desk meeting with businessman
The powers that be have decided that our big banks are essential to the Canadian economy and must follow stringent rules to keep themselves solvent. But what if? What if a bank…big or small…turned up its toes?

If your bank is a member of Canada Deposit Insurance Corporation, you’ll be protected to certain limits. Do you know what they are?

Non-registered (not in an RRSP or RRIF) savings and chequing accounts along with term deposits and GICs with terms of 5 years or less are covered for up to $100,000 (total) within a single bank. Foreign banks with branches in Canada may also be members of CDIC and if they are you are covered.

If you have $80,000 in a term deposit and another $30,000 in a savings account at the same bank, you are covered for only $100,000—not the $110,000 total.

Joint accounts are covered separately, as are Tax-Free Savings Accounts, Trust accounts, RRSPs and RRIFs. So you can have $100,000 in GICs or savings accounts in an RRSP and yet another $60,000 in a TFSA and still be covered. But CDIC coverage is only for those products that are CDIC insurable.

What’s not covered? The list is worth knowing.

Investments like mutual funds, stocks, bonds and debentures are not covered by CDIC.

Treasury bills aren’t covered. Nor are U.S. dollar or other foreign currency accounts. And while RRSPs and RRIFs are specifically named in the legislation, RESPs are not.

However, since rules do cover eligible deposits held by the trustee of a trust for another person as long as the trust disclosure rules are met, an RESP structured as a trust may qualify for separate coverage. You should check with your RESP provider for clarification.

Recently I got an email asking me if all those property taxes being paid to her lender as part of her mortgage payment would be covered if her bank went bust. I’ll admit, I had to scratch my head. Turns out the answer is “yes.”