Our Cash Accounts Now Have Up to $1 Million in Deposit Coverage

TORONTO, ON (October 21, 2024) - In 2023, we announced that your deposit coverage was boosted from $100,000 to $300,000, followed by another announcement in the spring that it jumped to $500,000. And now, like Gillette adding blades to razors in the mid-2000s, we’re back with even more.

We’ll get into how it works below, but here’s the gist: eligible deposits in your Cash account are now protected up to a cool $1 million in the unlikely event that any of our partner banks fail. That’s 10x the CDIC coverage that comes with a standard chequing account in Canada — and 10x the peace of mind to go with it (if you can quantify that sort of thing). 

Naturally, you might have some questions. Like: where’s the catch? (There isn’t one.) Or: what do I have to do now? (Nothing. The coverage is free and automatic.) Or: was this really hard to put together and would you like to take a moment to celebrate the financial acrobatics performed by the people who made it happen? (Yes, please.) We break it all down below.

First off, what is the CDIC?

The Canada Deposit Insurance Corporation is a federal crown corporation whose raison d’être is to insure eligible deposits placed with Canadian federal banks in the event that one or more of them goes bust. It’s all in the name, really.

It’s been nearly 30 years since a bank failed in Canada, but it has happened. And when it did, no one had to race to the nearest branch and exchange blows with other customers to see who got their money back. In fact not a single loonie under CDIC protection was lost.

Is Wealthsimple a CDIC member institution?

Nope. And although you can do many things with us that you can with a bank, we’re not technically a bank, either. (We’re so much better! And not only because of this.) It’s not the most exciting stuff to talk about, but we are a type of regulated financial entity called a securities dealer. Which means, among other things, that we don’t actually hold your cash ourselves. We use our CDIC-member banking partners for that. 

When you hold money with us, it’s held “in trust” with our banking partners — a fancy way of saying they hold your money and we manage it for you. Because up to $100,000 of eligible deposits with each bank are protected, when you put money in your Cash account, we split it up among our partners to effectively “stack” their coverage.

If you have $500K in your Cash account, for instance, we send $100K to five banks. There’s absolutely zero difference in your banking experience — you’ll still see $500K in your account and can do with it whatever you like — but now you also have $500K worth of eligible protection on it instead of just $100K. Just for being you! (And for choosing us.)

Who are your banking partners?

We get this question a lot, and we know the answer we’re about to give isn’t super fulfilling, but we’ll try anyway: we can’t name them due to contractual reasons. Considering that they’re all Schedule 1, CDIC-member, OSFI regulated banks (which means they’re 100% Canadian-owned and operated), however, you don’t need one of those double-brimmed detective hats to guess who they might be.

Why don’t other banks do this?

The CDIC covers eligible deposits at its member institutions for up to $100,000 (including principal and interest) per insured deposit category. By partnering with multiple CDIC members (as opposed to being one ourselves) we’re able to combine these benefits and bring you greater peace of mind.

What happens if one of your banking partners goes out of business?

From your perspective, not much. You don’t need to lift a finger, as CDIC will send us the funds and we’ll put it back into your account. Harmony is restored. (The CDIC put together this helpful guide answering 68(!) of the top questions about its coverage, if you really want to get into it.)

What if Wealthsimple goes out of business?

We don’t plan on doing that, but in the unlikely event that something were to happen, you would not be affected. As we mentioned above, your money is held in trust with our partners. If we go under, your money is with them — and is still your money.

What about my investments? Are they covered by the CDIC?

Not by the CDIC, but by a similarly acronymed institution: the CIPF. The Canadian Investor Protection Fund protects your managed and self-directed stocks, bonds, and ETFs — also to the tune of, you guessed it, $1 million. Gotta love that symmetry.

_{About Wealthsimple}

_{Wealthsimple is one of Canada’s fastest growing and most trusted money management platforms. The company offers a full suite of simple, sophisticated financial products across managed investing, do-it-yourself trading, cryptocurrency, tax filing, spending and saving. Wealthsimple currently serves 3 million Canadians and holds over $30-billion assets. The company was founded in 2014 by a team of financial experts and technology entrepreneurs, and is headquartered in Toronto, Canada. To learn more, visit www.wealthsimple.com.}

_{Contact: press@wealthsimple.com}