Q&A: Worried About Banks
A reader wonders if putting money in a credit union may be a safer way to go? Gordon Pape responds.
Question: It’s very alarming to hear about banks failing and funds being seized from private savings accounts and banks remaining closed to prevent clients having access to their own money! Even though this is happening in another country, my anxiety levels have been activated. Living in Alberta, I am wondering if I would sleep better and if my modest retirement portfolio would enjoy any more security in a credit union rather than in a bank. My question would be what relative advantage one has over the other, if any. – Carolyn B.
Gordon Pape answers: Credit unions are not going to offer any better protection than banks. For starters, they are regulated by the provinces, not Ottawa, so their capital requirements and the rules under which they operate will vary across the country. Also, they are not eligible for inclusion in the Canada Deposit Insurance Corporation (CDIC). All are covered by some form of insurance in their own province but in some cases (e.g. Manitoba) this is not backed by the government. I don’t see any advantage in using a credit union instead of a major bank in terms of safety.