Are GICs Safe in Canada? CDIC Coverage and the Ways You Can Lose

A standard GIC is one of the safest places to hold money in Canada: the issuing institution promises your principal and a fixed rate of interest, and deposit insurance stands behind that promise if the institution fails. This page covers what the insurance does and does not protect, and the ways a GIC can still leave you worse off. For how GICs work in general, see the GIC guide; the GIC hub lists every GIC page.

Where a GIC’s safety comes from

1. The issuer’s promise. A fixed-rate GIC is a contract: the institution owes you the principal plus the stated interest at maturity. Nothing in the market changes that amount.
2. Deposit insurance. If a CDIC member bank or trust company fails, CDIC reimburses eligible deposits up to the limit. Provincially regulated credit unions are backed by provincial deposit insurers.

CDIC coverage for GICs

The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation. It insures eligible deposits at its member institutions, which include the major banks, many online banks and trust companies, and federally regulated credit unions.

Coverage categories

Each category has its own limit:

Source: Canada Deposit Insurance Corporation – cdic.ca/depositors/whats-covered/. Each category is insured separately per member institution. There is no maximum term: GICs and other term deposits of any length, in Canadian or foreign currency, are eligible. Market-linked GICs are covered only if the principal is fully repayable.

A depositor with $100,000 in a non-registered GIC, the same in a GIC held inside a TFSA and the same in an RRSP GIC at one member bank has $300,000 fully insured, because each sits in a different category.

Credit union GICs

Provincially regulated credit unions are not CDIC members. Their deposits are insured by provincial corporations:

Provincially regulated credit unions are not CDIC members. They are covered by provincial deposit insurance or guarantee corporations instead, with limits and rules that vary by province. Federally regulated credit unions are CDIC members. Source: Canada Deposit Insurance Corporation – cdic.ca/depositors/whats-covered/. Always confirm current coverage with the specific credit union and provincial regulator.

In the provinces with unlimited coverage, there is no insured ceiling to plan around for eligible deposits. A federally regulated credit union (Coast Capital Savings, for example) is a CDIC member, so CDIC’s limits apply there instead.

When a GIC is not fully insured

• Above the limit. Eligible deposits above $100,000 in one category at one institution are uninsured.
• Non-member issuers. Some deposit-takers are neither CDIC members nor provincially insured credit unions. Membership is listed on the CDIC website.
• Market-linked GICs whose principal is not fully repayable are not insurable.

The ways you can come out behind

Inflation in numbers

A $10,000 GIC paying 4% while inflation runs at 5%:

The balance is up $816 after two years, but it buys less than the original $10,000 did. The gap is wider after tax in a non-registered account. The guide to how GIC interest is taxed works through the after-tax return in an example.

Early redemption

A non-redeemable GIC generally cannot be broken before maturity; some institutions make exceptions for death or hardship at their discretion. A cashable GIC can be cashed after a short holding period, usually at a lower rate for the time held. The trade-off between the two is covered in cashable vs non-redeemable GICs.

Market-linked GICs

A market-linked GIC returns your principal at maturity, but its interest depends on an index, is limited by a maximum return or a participation rate, and can be as low as the guaranteed minimum (zero on some products). Market-linked GICs explained works through the return scenarios.

How the Canadian system has held up

• CDIC has insured deposits since 1967 and has resolved 43 member failures; no depositor has lost insured deposits.
• The most recent CDIC member failure was in 1996, so none failed during the 2008 to 2009 financial crisis, and none of the Big Five banks has ever failed.
• Banks are supervised by the Office of the Superintendent of Financial Institutions (OSFI), which sets capital requirements.

Keeping large balances insured

Savers with more than $100,000 in GICs commonly:

1. Use several insurance categories at one institution (non-registered, TFSA, RRSP and so on).
2. Spread deposits across more than one CDIC member, checking that two brands are not the same member institution.
3. Hold part at a credit union in a province with unlimited coverage.
4. Check an issuer’s CDIC membership before depositing at any institution outside the major banks.

A GIC ladder spread across institutions also keeps each maturing amount smaller.

Related articles

• GIC guide for Canada
• Best GIC rates in Canada
• CDIC deposit insurance explained
• GIC vs HISA: which suits your savings
• Savings hub: savings accounts and GICs