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Are there any banks that you would go above CDIC limit?
November 21, 2017
1:12 pm
fabafter50
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Being retired and having to spread funds all over the place to stay within CDIC limits is getting challenging.
Are there any banks that anyone feels comfortable going over CDIC limits?
Thanks in advance

November 21, 2017
2:17 pm
phrank
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It's a good challenge to have. Consider yourself fortunate and don't take the easy route.

We've gone through the experience of having a financial institution going under. Luckily, we had done the extra work to have our investments spread out to maintain complete coverage.

Also, consider putting money in Manitoba Credit Unions. They insure an unlimited amount. Check it out here:

http://depositguarantee.mb.ca/faq/

November 21, 2017
2:39 pm
AltaRed
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I would stay with CDIC insured institutions and any of the big 5 are plenty safe enough with excesses. There's not a chance the oligarchy will be allowed to renege.

It is pretty easy to have a lot of money under a single corporate umbrella. Each of the big 5 have 3 or more separately insured entities, and without even considering registered accounts, it is easy for a couple to have $300k in each one with a his, hers and a joint account. That's $900k in say RBC, or Scotia or.....

Added: It might be okay to include Simplii and Motive and Tangerine to this list since their parent companies have reputatations at stake (albeit Simplii is not separate from CIBC). At one time, I had quite a large sum in ING circa 2003-2006 where my house money was parked until we re-patriated from the USA.

November 21, 2017
7:45 pm
Loonie
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I am asking myself the same question.
The Big Five may be "too big to fail", although the burden has been moved somewhat to preferred shareholders as I understand it. They do have numerous entities within them, but my experience was that not every type of investment can be covered under the different umbrellas as each seems to be dedicated to certain purposes. Bottom line for me is that it's next to impossible to get best rates from them on consistent basis.

I find it hard to separate this issue from the one around who accepts powers of attorney, and whether it will be difficult for executor/beneficiaries to get my assets out of another province upon death. So, I am trying to reduce/eliminate accounts based in other provinces, and I consider that a bigger priority than reducing number of FIs overall.

It's fine to think in terms of his/hers/ours = 300K per type of investment, but that personal 100K still has to be probated when the first one dies, and the strategy does not work for single people at all. I would like to have something set up that would be easy for the surviving spouse, since who wants to have to start all over again sorting it out at that point? For probate purposes, it would be best if all married people had only joint accounts, which reduces you to 100K limit per couple with CDIC.

The best solution would be for CDIC to increase its coverage. Second best is to live in Manitoba perhaps, but I doubt anyone would want to move there in retirement. A third thing to keep an eye on, especially if you live in Ontario, is that Ontario credit unions are increasing their non-registered coverage to 250K in January.

Don't forget Oaken with its double coverage through Home Bank and Home Trust. Right now, they don't have any great rates, but that is temporary. Right now, they are trying to build up their mortgage side again. Eventually, they will be looking for deposit money again.

In short, I can't think of any place where I would go much over the limits. I can only think of ways of taking advantage of situations like Oaken and Ontario CUs (or maybe MB CUs) that have potential for higher coverage.

It's worth remembering that Tangerine has its own insurance, whereas Simplii is included under CIBC, so be careful if you also have money at CIBC.

November 21, 2017
8:44 pm
Norman1
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I would exceed CDIC limits with the Big banks.

The ratings agencies estimate that their uninsured deposits are about the same risk as some provincial bonds.

Earlier post has this chart showing the Big 6 Banks and some provinces on a ratings scale:

DBRS Rating Issuers
AAA Government of Canada
AA (high) Province of Alberta
Province of British Columbia
AA Bank of Montreal
Bank of Nova Scotia
Canadian Imperial Bank of Commerce
Royal Bank of Canada
The Toronto Dominion Bank
Province of Saskatchewan
AA (low) National Bank of Canada
Province of Ontario
A (high) Province of Manitoba
Province of Quebec
A
A (low) Province of Newfoundland & Labrador
Province of Prince Edward Island
November 21, 2017
9:19 pm
AltaRed
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This is getting a little off topic, but to complete the thought, when it comes to POA or estate matters, the big 5 (and likely other long standing brick and mortar banks) are highly familiar with all these matters. They are the place that makes it easiest for Attorneys or Executors to do their jobs. Heck, RBC even sent me their 'pro forma Letters of Direction' to make it easier for me to include all relevant information when giving them direction on estate disbursements.

Trust companies in particular know what this is all about since this IS their business. That is a far cry from where many of the online banks are at. It took me about a week for Zag bank to eventually send me the step-by-step process for what my Attorney would have to do in event I went cuckoo. They did however follow up their detailed email with a phone call to make sure I was satisfied.

I think the point is it may more likely the fringe players have more difficulty with POAs and Estates than the big 5. My sons, who are work in the big 5 say they see this stuff on a weekly, or more often, basis. Sometimes it is worth giving up a bit in interest rate to simplify one's financial matters.

FWIW, I am not daunted by the probate process. Yes, it takes some time, 2-3 months perhaps to get probate, and another month perhaps to disburse assets, but that is no big deal, particularly if there are at least a few joint accounts here and there. There is too much 'fear' made of the probate process. Been there, done it twice.

I think the OP need not be worried about being over the top on the most credit worthy institutions. They will be around a lot longer than any of us.

November 21, 2017
9:23 pm
AltaRed
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FWIW, Moody's rates BC as AAA 12 years in a row. We, in BC, need to be able to brag about something in addition to our climate.

While BC's economy continues to lead the nation, so does our credit rating. Thanks to a track record of prudent fiscal planning and strong economic growth, Moody's Investors Service confirms our AAA-stable credit rating – the highest possible – for the 12th year in a row.

November 21, 2017
9:25 pm
phrank
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Loonie said
Second best is to live in Manitoba perhaps, but I doubt anyone would want to move there in retirement.

Oh no, I wouldn't suggest retiring there, but all those MB CU websites are also covered and you don't have to live in the frozen land of Mosquito's to benefit. I wouldn't put any of my money with the big banks for the rates they offer, only enough to avoid fees and take advantage of their big bank services which a no fee account or MBCU can't cover.

Here's a list of all the Virtual Manitoba Credit Unions which cover 100% of deposits. Most are already on this sites comparison charts, because of their good rates.

AcceleRate Financial
Achieva Financial
Casera Financial
Hübert Financial
Ideal Savings
Implicity Financial
MAXA Financial
Outlook Financial

https://creditunion.mb.ca/find-a-credit-union/links-to-credit-union-internet-banking-sites/#more-455

Some of the brick and mortar MBCU's also let you open accounts if you're a non-Manitoba resident, so there are lots of options if you're so inclined.

November 21, 2017
10:28 pm
Loonie
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The issue with probate is not the time it takes, but the tax it requires. With a joint account, you can avoid this fee, but you have less eligible for CDIC if you are a couple.

Big Five are undoubtedly the most secure for over-limits, but, if we found them adequate for rates, we wouldn't be using this website.

November 22, 2017
8:19 am
AltaRed
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Loonie said
The issue with probate is not the time it takes, but the tax it requires. With a joint account, you can avoid this fee, but you have less eligible for CDIC if you are a couple.

Big Five are undoubtedly the most secure for over-limits, but, if we found them adequate for rates, we wouldn't be using this website.  

Indeed, it is a matter of choice and I only brought up the big 5 in context of the OP's question in the first place. One cannot have the best rates and blue chip security so it is likely a matter of balance. It is a good thing to have options.

We have discussed the issue of probate fees elsewhere, but they are not a big deal. I live in BC, the second worse province for probate fees in Canada, and I am not concerned with a 1.4% fee on my estate upon death. That leaves 98.6% for my beneficiaries while potentially minimizing other financial risks.

November 22, 2017
11:07 am
Doug
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I don't pay attention to CDIC limits at all, really. Even if an institution were to fail, CDIC and OSFI would facilitate the quick transfer of all your deposits to another institution - you just may see your interest rate on GIC changed or redeemed to your savings account early, at most.

So, basically, rather than list "which ones I would go over CDIC limits with," I would instead list banks that I wouldn't:

- Home Trust Company
- Home Bank
- Equitable Bank d/b/a EQ Bank
- WealthONE Bank of Canada (only because they are newer)
- Peoples Trust Company (again, because they are very small)

I think that's it. 🙂

Cheers,
Doug

November 22, 2017
3:16 pm
Rick
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Doug said
I don't pay attention to CDIC limits at all, really. Even if an institution were to fail, CDIC and OSFI would facilitate the quick transfer of all your deposits to another institution - you just may see your interest rate on GIC changed or redeemed to your savings account early, at most.
So, basically, rather than list "which ones I would go over CDIC limits with," I would instead list banks that I wouldn't:
Cheers,
Doug  

I agree, but still wouldn't put all my eggs in one basket. I would personally cap my RSPs at 200K just to keep it simple and TFSA at 100K just because it will take another few years to get there and I only deal with them once a year until I need them.... hopefully never.

List of financial collapses covered by CDIC since 1967

Commonwealth Trust Company 1970
Security Trust Company Limited 1972
Astra Trust Company 1980
District Trust Company 1982
AMIC Mortgage Investment Corporation 1983
Crown Trust Company 1983
Fidelity Trust Company 1983
Greymac Mortgage Corporation 1983
Greymac Trust Company 1983
Seaway Mortgage Corporation 1983
Seaway Trust Company 1983
Northguard Mortgage Corporation 1984
CCB Mortgage Investment Corporation 1985
Canadian Commercial Bank 1985
Continental Trust Company 1985
London Loan Limited 1985
Northland Bank 1985
Pioneer Trust Company 1985
Western Capital Trust Company 1985
Bank of British Columbia 1986
Bank of British Columbia Mortgage Corporation 1986
Columbia Trust Company 1986
North West Trust Company 1987
Principal Savings & Trust Company 1987
Financial Trust Company 1988
Settlers Savings and Mortgage Corporation 1990
Bank of Credit and Commerce Canada 1991
Saskatchewan Trust Company 1991
Standard Loan Company 1991
Standard Trust Company 1991
Shoppers Trust Company 1992
Central Guaranty Mortgage Corporation 1992
Central Guaranty Trust Company 1992
First City Trust Company 1992
First City Mortgage Company 1992
Dominion Trust Company 1993
Prenor Trust Company of Canada 1993
Confederation Trust Company 1994
Monarch Trust Company 1994
Income Trust Company 1995
North American Trust Company 1995
NAL Mortgage Company 1995
Security Home Mortgage Corporation 1996

Seems mostly trust and mortgage companies and the last one was in 1996, so not really concerned about the stability of CWB/Motive.
I was with Bank of BC when they were taken over by HSBC. Other than the name change on my cheques, didn't notice any change in rates, maturity, balances or service. Right away anyway... they slowly slipped into big 5 practices over the years and I got rid of them eventually.

November 22, 2017
7:19 pm
Bill
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I don't get it, failures every few years for 27 years then nothing in the last 21 years - ?

November 22, 2017
7:32 pm
AltaRed
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Not hard to understand. There were a lot of boutique outfits in that period of time, many/most of whom were mortgage lenders, made business loans, financed land bank developers, etc. that defaulted during recessions, high interest rate years, etc.

Think of the insane high interest rates of the very early '70s, including wage and price controls, OPEC oil prices, another recession in the early '80s (OPEC again) when Albertans defaulted on a lot of RE and business closures, recession of 83?, the oil price crisis of 1986 that caused outfits like Principal Trust to go under (I had accounts there), then the Toronto RE crash of circa 1990?, the Vancouver RE crash of a similar time, the recession of 91? (or was it 93?), etc. You can almost pick the years of insolvencies that went with those economic gyrations. It was only after 20 years of consolidation that we have ended up with far fewer, but hopefully stronger institutions (for the most part).

I could probably look up more accurate dates for all of these, but I lived through them all, including being a young grad in 1971 and then having all hell break loose within a few years with super inflation. It was about 1973 when mortage rates hit 21%. Millenials complain about the uncertainty of today... They just were not around to go through that circa 25 year period.

November 22, 2017
8:40 pm
Loonie
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Good list, AltaRed. I remember them too.
And, yet, some people are convinced none of this will ever happen again (or anything else they never envisioned), so all is cool with very large deposits. It's usually when you let your guard down that the sh*t hits the proverbial fan.

That said, my recollection is that at some point following the string of failures, regulatory banking reforms were introduced that forced them onto a surer footing, making our deposits more secure than they had been and putting the CDIC in a better financial position.

November 22, 2017
9:29 pm
AltaRed
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I do agree that I think? there were many regulatory changes to tighten the ship, e.g. capital requirements, OSFI oversight, and maybe several others. I sort of look at that period in our financial history as not dissimilar to the US S&L crisis, but tame in comparison to that sad chapter in US history.

This gives a perspective of what Cdn interest rates looked like over 50 years or so
http://www.mississauga4sale.co.....t-1951.htm

And the list of US recessions (and for that matter, Canada too, for the most part)
https://www.thebalance.com/the-history-of-recessions-in-the-united-states-3306011 and the corresponding S&P500 graph which would overlay recession history http://www.macrotrends.net/232.....chart-data

I remember them all quite well... starting with the 1970 one. I graduated in '71 and that decade was a fairly tough one.

November 23, 2017
4:30 am
Top It Up
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Loonie said

Second best is to live in Manitoba perhaps, but I doubt anyone would want to move there in retirement. 

That's because everyone in Ontario is retiring to that hot bed of romance and intrigue, Elliot Lake.

November 23, 2017
7:51 am
Top It Up
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AltaRed said

It was about 1973 when mortage rates hit 21%.  

You're off by a decade on that rate - those rates were in the 80s.

November 23, 2017
10:30 am
Bill
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I agree, AltaRed, lots more boom and bust stuff used to go on back then, so I guess the real question is what happened after 1996 or so to all the (as you say) "economic gyrations"? Was it the baby boom bulge that caused all that up-and-down stuff back then?

November 23, 2017
11:25 am
AltaRed
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Top It Up said

You're off by a decade on that rate - those rates were in the 80s.  

Indeed. I shouldn't post early in the morning when I don't QC what I write.

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