Q&A: Worried about GIC
A reader wonders what would happen to his money if the bank went belly-up.
Q – I have invested $210,000 in a two year non-redeemable GIC at a major bank. In case of bank failure I know that I’m secure only for $100,000 under the Canada Deposit Insurance Corporation and the rest would be lost.
My question to you is what is the best thing to do? Should I move anything over $100,000 to another bank or do you think that chances of one of the major banks going bankrupt are pretty slim and I should just leave the $210,000 with the same bank? – George V.
A – Our banks are generally regarded as being the strongest in the world. That doesn’t mean they are immune to failure but if any of them were to go under it would only happen in a time of catastrophic economic collapse. Remember, they didn’t need to be bailed out in 2008 while the U.S. government was spending billions to prop up its banking system.
However, the fact that you would even ask the question suggests some measure of concern. So why worry? When the GIC matures, spread the money around among three banks. You’ll receive $100,000 CIDC coverage at each, so you’ll be completely protected. – G.P.
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