Motusbank | Page 2 | motusbank | Discussion forum

savemoresaveoften said

Any idea what happened to those Coast customer who has over $100k and in fixed term deposit (GIC) when they changed from CU to bank ? Would they now have uninsured deposit for the amount above $100k ?  

Rick is correct. Pre-existing demand deposits (those in chequing and savings accounts) have unlimited deposit insurance from 6 months from the date of transition to CDIC (CDIC provides the insurance, though, not CUDIC). Term deposits carry unlimited deposit insurance through to maturity, at which point, that's correct that only $100,000 is insured.

Coast only has one institution, but there are still multiple ways to have more than $100,000 insured, if that matters to you. Note that the CDIC insurance limit includes paid interest (accrued but yet unpaid interest is guaranteed, but once it's been paid, if it exceeds your CDIC deposit insurance limit, part will be uninsured).

- $100,000 held in your name
- $100,000 held with your wife
- $100,000 held in your RRSP (or RRIF)
- $100,000 held in your TFSA* (believe this is separate now; it used to be comingled within non-registered deposit limits)
- $100,000 held in a mortgage property tax account (usually doesn't pay interest, or very little, so is non-viable)
- $100,000 outstanding bank draft payable to you (unclear as to whether or not you could issue multiple bank drafts payable to you - I assume you could because it likely goes by the bank draft serial number...plus, someone else could make a bank draft payable to you)
- $100,000 in an informal trust account
- $100,000 in a joint account with your wife and your son (or daughter)
- $100,000 in a joint account with your wife and your daughter (or son)
- $100,000 in a joint account with your wife, your son, and your daughter
- $100,000 in a joint account with your wife, your son, your daughter, and Fluffy (your cat)**

* Provided you have sufficient TFSA contribution room. Definitely possible if you previously had capital gains from a TFSA at a self-directed discount brokerage account
** Just kidding, this is non-viable as Fluffy is neither a legal person nor can she (or he) prove her (or his) ID to the sufficient standards required by the bank and regulators, but you get the idea (likely).

Cheers,
Doug

@Briguy, thanks for the follow up in reply to my example of CDIC coverage. Indeed, you're right, in most cases, the new CDIC deposit insurance categories and insured deposit types kick in at the end of April 2020 (~1 year's time). As I recall, I likely posted this example before the planned CDIC deposit changes were announced.

My reason for not stipulating that you could hold $100,000 in each of an RRSP and a RRIF is because that scenario would be somewhat less common. While one could have both a RRIF (before age 71) and an RRSP, it's less likely they would have significantly large balances in each. But yes, to your point, they're definitely separate deposit categories so one could hold $100,000 including accrued but as yet unpaid interest in each and be fully CDIC insured.

The change re: mortgage property tax account coverage, to be included within one's sole or joint deposit insurance (depending on how the mortgage property tax account is held) limit is a curious one, as was the elimination of CDIC insurance on travellers' cheques despite the fact that Scotiabank and many credit unions are still selling & cashing them. Ah well, c'est la vie, I guess. 😉

Cheers,
Doug