A guaranteed investment certificate, or GIC, is a type of investment that provides a guaranteed return over a specified time period. You can invest in GICs through traditional banks as well as trust companies and credit unions, and they’re considered a low-risk way to build your wealth.
But which financial institution offers the best GIC rates in Canada? The answer depends on the type of GIC you choose and the term of your investment.
In this guide, we’ll explore the different types of GICs available and explain how GICs fit into your savings plan that includes TFSA, RRSP and even RESP. We’ll also show you how to find the best GIC rates in Canada and the other factors to consider when choosing a GIC.
GIC stands for guaranteed investment certificate. A GIC is an investment product that lets you earn a guaranteed rate of interest on your savings. In return, you have to invest your money for a term ranging from as little as one month to as long as 10 years. Typically, the longer the term, the higher the interest rate.
Interest could be paid at regular intervals, such as monthly or quarterly, or when the GIC term ends. When your term expires, you’ll get the interest you earned on your account plus the amount you originally deposited.
GICs are generally considered a safe and low-risk way to invest your money, so it’s important to find the best GIC rates to maximize your return. However, there are many different types of GICs, and the best one for you will depend on your financial needs and savings goals.
Investing in a GIC requires you to deposit your money with a bank or financial institution for a fixed period. Think of it as if you’re lending money to your bank — in return for giving them access to your money, they’ll pay you interest at a guaranteed rate.
GICs let you earn a higher interest rate than you can typically get with a normal savings account. Interest rates can be either fixed or variable, but they don’t offer the same potential high rate of return as investing in stocks or ETFs.
Most GICs require you to lock in your money until the term ends. However, with cashable and redeemable GICs you can withdraw your money before the end of the term, but you’ll need to accept a lower interest rate and usually pay a penalty for accessing the funds early.
According to the Bank of Canada, as of June 25, 2025, the average rates for GICs in Canada are:
| GIC term | Average rate |
|---|---|
| 1-year GIC | 2.62% |
| 3-year GIC | 2.65% |
| 5-year GIC | 2.9% |
To help you choose the best GIC for your specific needs, here’s a list of the types of GICs found in Canada, along with a brief explanation of how each type of GIC works.
Government guarantees on GICsThe money invested in almost all GICs is covered under Canadian Deposit Insurance Corporation (CDIC) insurance or provincial insurance. Under CDIC, or the provincial equivalent, all investments or accounts up to $100,000 are 100% insured. Should the financial institution collapse or fail to pay out, for any reason, the government will reimburse you the full amount.
A fixed-rate GIC gives you a set rate for the duration of your term. This gives you peace of mind since you know exactly how much you will earn from your investment, even if the market takes a downturn. This makes fixed-rate GICs a safe and secure choice, but it also means they have lower interest rates than variable-rate products. However, in recent years, fintech disrupters and online banks began offering more competitive rates on fixed-rate GICs.
Some banks also offer GICs with interest rates that increase each year of your term. For example, the RateRiser Plus GIC from BMO offers an interest rate of 2.70% in the first year, which then escalates to 2.80% in the second year, 2.90% in the third year, 3.10% in the fourth year and 3.25% in the fifth year.
A variable-rate GIC fluctuates in line with the prime rate of your bank or financial institution. So if the bank raises its prime rate, its GIC interest rates go up too.
This allows you to take advantage of rising rates to maximize your returns. Of course, it also means that your returns could be lower than expected if interest rates fall.
A market-linked GIC is a type of variable-rate GIC, but the interest rate applied to the GIC is not linked to the prime rate, but rather a stock market index such as the S&P/TSX 60 Index.
Often advertised as market-growth GICs, these market-linked GICs are tied to the highs and lows of the stock market, offering the potential for higher returns, but a greater level of unpredictability.
To help keep the guarantee of a GIC, and minimize payouts during strong equity markets, most market-linked GIC providers will impose a minimum and maximum limit on returns. This allows market-linked GICs to offer the peace of mind of traditional GICs — by guaranteeing 100% principal protection — while taking advantage of the higher return potential of the stock market.
For example, the Canadian Banking & Utilities GIC from TD has a maximum return of 30% over a 3-year term, but in bear markets when stocks underperform, the guaranteed minimum interest is 1%.
The difference between registered and non-registered GICs comes down to the accounts in which they’re held. Registered GICs can be held in any registered tax account, such as a Registered Retirement Savings Plan (RRSP), a Registered Education Savings Plan (RESP) or a Tax-Free Savings Account (TFSA).
Quite often, interest rates on registered GICs are higher than on non-registered GICs, however, potential penalties and restrictions make it more difficult to access the funds invested in a registered GIC once it matures.
Another aspect of registered GICs is that the initial investment cannot exceed the contribution room of the registered account. For instance, if you only have $1,000 in contribution room left in your TFSA, you cannot purchase a registered GIC for $2,000 without incurring a penalty.
Non-registered GICs are exactly the same as registered GICs, but aren’t held in tax-preferred accounts, such as an RRSP or TFSA. This means all earnings from a non-registered account are taxable in the year of accumulation and must be declared when filing your taxes.
Short-term GICs mature in less than 365 days and typically offer lower interest rates. The advantage of a short-term GIC is that it allows you to earn more interest than you would with a savings account or even a high-interest savings account.
Since a short-term GIC matures in a shorter period of time, they’re ideal for investors who want to earn more on their money without having funds locked in for too long.
Long-term GICs usually come with higher interest rates and have terms between 1 and 10 years. If you’re investing with a long-term savings goal in mind, this makes them well worth a look.
Keep in mind, long-term GICs offer higher interest rates, but your investment money is locked in for the specified term, meaning you won’t get access to that cash until the GIC matures.
A foreign currency GIC accumulates interest in a foreign currency like the US dollar, British pound or euro. Foreign currency GICs are beneficial if you believe a certain currency will do well over a period of time, or you frequently travel to that region and want to hedge your expenditures using the guarantee of GIC earnings.
The downside is that, unlike local investments, foreign currency GICs aren’t covered by CDIC insurance, plus they often come with lower interest rates than their Canadian GIC counterparts.
A cashable GIC is a short-term investment option, as you can cash it out before it reaches maturity. This gives you the flexibility to invest at a competitive interest rate and cash out if the market changes.
Most cashable GICs have a one-year term; however, they typically have a waiting period of 30 to 90 days when your money is locked in and redemption isn’t allowed. Once the waiting period ends, you’re free to redeem the GIC without incurring a fee or penalty.
The one drawback is that cashable GICs usually come with lower interest rates than traditional GICs.
Redeemable GICs are similar to cashable GICs in that they allow you to access your money earlier if needed. The key difference between a redeemable GIC and a cashable GIC is that you won’t have to wait for a non-redemption period to pass before cashing out.
Non-redeemable GICs typically offer the highest interest rates in exchange for less flexibility when it comes to withdrawing your funds, as it can be difficult to access your money early and you’ll need to pay a penalty to do so.
Terms range from 30 days to 5 years, and the longer the term, the higher the interest rate.
You’ll want to consider the following features when comparing GICs:
Owning a GIC is considered one of the safest ways to grow your assets over time. As part of a diversified portfolio, a GIC is considered fixed income — a conservative, stable investment that can offer a return even during market volatility.
One advantage of GICs is that the principal sum invested — your money — is guaranteed. This means there’s no risk of erosion of principal or loss due to market fluctuations.
Depending on the GIC you purchase, the quoted GIC interest rate is also guaranteed, which means that despite market conditions, you’ll earn that quoted interest rate when the GIC matures.
However, all this stability and security does come at a price. GICs don’t offer the same potential for high returns as other riskier investments. Without proper planning, GICs can also underperform, particularly in a higher inflation market.
GICs allow you to lock in a certain amount of money at a specified rate for an agreed period of time, usually 1 to 5 years, although terms can last as long as 10 years.
To help appreciate the power of this savings product, try using this compound interest calculator to illustrate how much interest you could earn depending on the interest rate and how often interest is compounded.
To use the interest rate calculator, input the interest rate offered on the GIC, the amount you’re investing and the length of time.
GICs come with a number of features that make them a worthwhile investment to pursue.
GICs also include a handful of drawbacks you should be aware of before investing.
Since many investors hold interest-bearing investments, like GICs, in registered accounts it can be confusing as to whether or not GICs are taxable? The short answer: Yes.
Any interest earned is considered taxable in Canada. However, you can reduce or eliminate taxes owed if you hold an interest-bearing investment inside a registered account, like an RRSP or TFSA.
Interest from GIC investments are taxed as interest income. The tax rate is based on your marginal rate — the tax bracket on the next dollar earned.
For example, let’s say you’re an Ontario resident who earns $50,000 in employment income plus $5,000 in investment interest, including GICs, for total income of $55,000. Based on this, your federal marginal tax rate will be:
While your provincial marginal tax rate is:
In this example, this Ontario resident would end up paying a total of 20.05% on all earnings below $52,886 — about $10,603 in taxes owed. Plus, another 29.20% of tax on all earnings above $58,887 — $617, on the $2,114 of taxable income.
If you’re ready to invest in a GIC, follow these steps to purchase one:
Start by assessing your finances to decide what GIC term suits your needs.
If you think you’ll need your cash soon but still want to earn more interest than if you park the money in a savings account, opt for a short-term (one year or less) GIC. This means you’ll earn less interest (generally between 2% and 3%), but your principal will be protected and you can access your money sooner.
But, if you want to earn a higher interest rate, typically between 3.5% to 4%, and don’t mind your funds being locked away, consider a long-term GIC (between 1 and 10 years).
After picking a term, choose one of the GICs we mentioned earlier, such as a fixed-rate or market-linked GIC. Each type has its own pros and cons, so choosing the best one for you depends on your current finances and financial goals.
Once you know what kind of GIC and term you want, you’re ready to pick a financial institution. To choose the right one, consider factors like interest rates, minimum deposit requirements and withdrawal conditions.
If you already hold a bank account or registered investment account, it’s easier to purchase a GIC from that bank. However, you can typically find better GIC rates at online banks and other alternative financial institutions, so shop around.
When you’re ready to buy your GIC, you can do so online, over the phone or by visiting a branch. Bring your government-issued ID with you, especially if you don’t already have an account with the financial institution.
You can purchase GICs from:
GIC laddering is an investment strategy designed to help you maximize the interest you earn without locking all your funds away in a single long-term GIC. The basic approach is to split the money you want to invest into five equal portions, then invest in five separate GICs with staggered maturity dates.
For example, let’s say you have $10,000 to invest. Split that up into five separate $2,000 portions, each of which can be invested in a GIC with terms ranging from 1-year to 5-years. As each GIC matures, you can reinvest the principal plus interest into a new 5-year GIC, and repeat.
This allows you to maximize your returns thanks to the higher interest rates offered by long-term GICs. At the same time, you also have the flexibility of being able to access a portion of your total investment (if needed) as it matures each year.
Not sure whether a GIC is the right fit for your investment goals? You may want to consider some of the following alternatives.
A Tax-Free Savings Account (TFSA) can hold many different types of investments, including cash, stocks, bonds and even GICs. This flexibility allows you to build a diversified portfolio of investments that can potentially deliver higher returns than a GIC. The interest you earn on your TFSA investments is also tax-free, and you also get the flexibility of being able to access the cash in your account at any time.
However, TFSAs have contribution limits. While these contributions limits can change from year-to-year, the cap for 2025 is set at $7,000 per year.
Mutual funds are a higher-risk alternative to GICs, but they also offer the potential for higher rewards. The performance of a mutual fund is linked to the aggregate performance of a package of securities (typically stocks and bonds) in the market. This means that your return will vary based on how well your mutual fund performs as a whole.
A mutual fund has the potential to comfortably outperform the return from a GIC. At the same time, if the stock market crashes or your mutual fund performs poorly, you could lose money, including your principal investment.
Mutual funds are more flexible than non-redeemable GICs because you can cash in your investment at any time without incurring a penalty. Your investment is also managed by a professional fund manager, but you’ll need to pay annual management fees as a result.
You can invest in a mutual fund through an online stock trading platform.
GICs and term deposits are both secured investments. This means you’re guaranteed to get your investment funds back at the end of the investment period (known as a term), in addition to any interest accrued on the balance held in the investment products.
The key difference between a GIC and a term deposit is the length of time your money is locked into the investment. Term deposits are usually short-term, lasting nine months or less, while GICs are longer, lasting one year or more.
Bonds allow you to earn a fixed rate of interest and return your principal once they reach maturity. The interest rate you’ll get varies based on whether the bond is corporate, municipal or federal.
Bonds can be cashed in or traded at any time, so they’re more flexible than GICs. But their returns may be lower than what you can get with a GIC, and they’re also not covered by CDIC insurance. So if the bond issuer gets into financial difficulty, they may not be able to pay back your principal or interest.
A high interest savings account pays compound interest to help you reach your savings goals. The best accounts offer competitive rates and no monthly fees, and many accounts won’t penalize you for dipping into your savings. This makes a high interest savings account well worth considering if you want your money to work harder for you, but you need the flexibility to access your balance when needed.
The downside is that savings accounts offer lower interest rates than GICs. So if you’ve got a long-term savings goal in mind, a GIC may be a better choice.
According to our latest Finder: Consumer Sentiment Survey January 2025, 16.68% of Canadians plan to open a GIC account this year. It’s actually the third most popular type of account to open after savings and TFSA accounts, which shows that Canadians are prioritizing saving and increasing their funds this year.
It’s also the fourth most common account to have, after chequings, savings and joint accounts. According to our survey, 22.48% of Canadians have one GIC account, 6.19% have two and 5.5% have three or more, allowing them to diversify their portfolio and maximize their savings.
A GIC is a safe and secure way to help grow your wealth. Investing in GICs is a low-risk approach and can form an important part of a diversified investment strategy. However, it’s important to compare a range of options to find the best GIC rates in Canada. GIC interest rates vary depending on the financial institution you choose and the term of your investment, so shop around to find the best GIC for your needs.
GIC laddering lets you enjoy guaranteed returns without locking in your funds for the long-term.
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