Rate Increase for 1-Year Term (average 4.25%) - July 27, 2022 | Page 3 | Hubert Financial | Discussion forum

Greedy Guy said

CDIC was established by federal legislation, CDIC Act. CDIC coverage is guaranteed by a large investment portfolio and, if required, federal government regulated/supported loans.  

MB govt similarly legislates their CU insurance. Given that about half of Manitobans belong to a CU, govt would essentially have to step in if needed.

With MB CUs, it would be possible to add up all the deposits and see what the ratio is between insurance and deposits.

I don't know any way of ascertaining the total value of deposits insured by CDIC. If anyone knows, please post.
Unless that can be ascertained, we can't determine the adequacy of CDIC, even including its borrowing capacity.
And borrowing, in either case, would be a risky business.

There used to be someone on this forum, can't remember the name exactly, "Northern...", who had all this figured out. Perhaps he/she will comment.

Loonie said

MB govt similarly legislates their CU insurance. Given that about half of Manitobans belong to a CU, govt would essentially have to step in if needed.

With MB CUs, it would be possible to add up all the deposits and see what the ratio is between insurance and deposits.

I don't know any way of ascertaining the total value of deposits insured by CDIC. If anyone knows, please post.
Unless that can be ascertained, we can't determine the adequacy of CDIC, even including its borrowing capacity.
And borrowing, in either case, would be a risky business.

There used to be someone on this forum, can't remember the name exactly, "Northern...", who had all this figured out. Perhaps he/she will comment.  

Borrowing capacity of CDIC is probably very similar to the borrowing capacity of the federal government. From FAQ per https://www.cdic.ca/your-coverage/faqs/#information-q1 :

"Can CDIC go bankrupt?
CDIC’s role is vital to the stability of the Canadian financial system and to the flow of financial services. The CDIC Act provides that CDIC cannot be placed into bankruptcy. CDIC is a Crown corporation and is backed by the Government of Canada."

CDIC discloses amounts of deposits insured in its annual reports.

$968 billion insured (25% of the deposits with CDIC members) is reported in the Management’s Discussion and Analysis section, page 16 of its 2021 annual report:

Insured deposits

As at April 30, 2020 (the annual date on which insured deposits are calculated for insurance premiums), deposits insured by CDIC increased by 14% year over year to $968 billion and accounted for 25% of total deposits held at member institutions. The growth in insured deposits reflects amendments to the deposit insurance eligibility criteria which extended coverage to include eligible deposits held in foreign currency and eligible deposits with terms greater than five years, as well as the impact of the COVID-19 pandemic that saw an increased level of savings by Canadians. …

That's correct: 75% of the total, about $3.8 trillion, deposits with CDIC members is not insured.

Most of the CDIC member deposits don't rely on CDIC deposit insurance.

Interesting and germane topic as I am on verge of starting to lock in at several locations. Tangerine (CDIC), Hubert(DGCM), VanCity(CUDIC/BCFSA), EQ (CDIC), TD (CDIC).

For some reason I thought that BC Credit Unions were backed by Provincial Gov, but like Manitoba CU's, evidently not: "The deposit guarantee is not an obligation of, and neither CUDIC nor BCFSA are backstopped by, the provincial Government."

https://www.bcfsa.ca/media/1959/download

While unlikely things will get bad enough to destroy savers nest eggs, the fine print suggests that even GIC's have some risk.

Are there any provinces that actually do fully back Term Deposits? Short of in depth analysis to discover current liabilities versus capacity to insure, it seems the best/only solution to safeguarding deposits, is to spread it around and that's about as good as it gets if you want to get paid on your deposits.

I am new to using redeemable GICs.
Do I wait until the interest is deposited before I redeem my gic so I can move to another redeemable GIC for a higher rate?

Or on the first day after the 3rd month do I call to redeem my gic, even if the interest may not have shown up by then?

Also, after I call does it happen immediately or shows up on my account the next day?

Thanks!

MG said

I usually call a week in advance to give instructions.  

I usually log in early AM the day the interest is due to confirm the interest was paid. I then call and within 2 minutes the GIC is closed with funds in my Savings Account. I then open a new GIC on line. Total time, under 5 minutes.