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Compare GICs in Canada

How do Guaranteed Investment Certificates work? What are the different types of GICs available in Canada? And are GICs worth it?

When it comes to investing, very few asset classes can guarantee you’ll never lose money like a GIC can. As the name implies, a guaranteed investment certificate, or GIC, is one of those rare investment options that offers guaranteed returns at the end of your term.

For millions of Canadians, a GIC is the safest way to invest for the future without losing money on your original deposit, and as interest rates climb, these locked-in investments become more attractive to Canadians. How much interest you’re entitled to receive varies based on three criteria: term, issuer and whether you select a variable rate or fixed rate GIC. Our GIC guide below explores the different types of GICs available and the best GIC rates in Canada, offers a list of GIC providers in Canada—and answers the question: Are GICs worth it?

Compare GIC rates

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Name Product Term Interest Rate Minimum Investment
1 year
Lock in a 4.75% interest rate on a 1 year GIC. To fund your high interest GIC, you’ll need to open an EQ Bank Savings Plus Account first.
Tangerine GIC
1 year
Open a Tangerine GIC within minutes. Earn 4.65% on a 1 year GIC, or choose from other terms and rates.

What is a GIC?

A guaranteed investment certificate (or GIC for short) is an investment vehicle that lets you earn an interest rate on your savings. In return, you usually have to lock your funds in over a fixed term that can last anywhere between 30 days and 5 years. When your term expires, you’ll get the interest you earned on your account plus the amount you originally deposited. This is usually paid out as a lump sum of cash that you can re-invest or put into savings.

There are many different types of GICs, and the best one for you will depend on your unique set of financial needs and savings goals. The main benefit of all GICs is that they are a relatively safe investment because you can’t lose the principal amount you invest. The main downside is that you won’t usually be able to access any money you put into your account until your term ends (unless you sign up for a cashable or redeemable GIC).

How do GICs work?

GICs are relatively low-risk investments that let you earn a higher interest rate than you might be able to with a normal savings account. Interest rates can be either fixed or variable, depending on your preferences. A fixed rate GIC will offer a consistent rate of interest for the duration of your investment. Variable rate GICs offer interest rates that fluctuate in line with market conditions.

For example, you might earn around $30 per year on a $1,000 investment with a fixed rate of 3%. As the amount you invest increases, this dollar figure will go up. With a variable interest rate GIC, your return will be more of a mixed bag. This is because you could earn a 4% return in one month and a 1% return in the next month, depending on what the market is doing.

Are GICs taxable?

GICs are only taxable if they are held in non-registered accounts. For example, if you hold your GIC in a regular savings account, you’ll have to pay taxes on any interest you earn. GICs are not taxable if they are held in a registered account such as a TFSA, RESP, RRSP or RRIF. This means you won’t need to claim the interest you earn on your taxes as income. Learn more about registered vs non-registered GICs.

Types of GICs

Depending on the financial institution, there are several types of GICs with different terms and interest rates.

  • Fixed vs variable (or market-linked) rate. A fixed rate GIC gives you a set rate for the duration of your term, while a variable rate GIC will fluctuate according to how well the stock market is doing. There’s more risk involved with a variable rate since you can’t predict how much interest (if any!) you’ll get back.
  • Registered vs non-registered. Registered GICs can be held in RRSPs, RESPs and TFSAs, which means the interest you make on them is tax deductible. The interest earned on non-registered GICs, on the other hand, has to be claimed as taxable income when filing your taxes. Read up on RRSP GICs, RESP GICs and TFSA GICs.
  • Short vs long-term. Short-term GICs typically last less than a year and usually come with lower interest rates. Long-term GICs usually come with a higher interest rate and can last up to 10 years.
  • Local vs foreign currency. You may be able to invest in a GIC that accumulates interest in a foreign currency like the US dollar, British pound or euro. This might sound like a no-brainer given currency conversion rates but there are some downsides. Unlike local investments, foreign currency GICs aren’t insured and they often come with lower interest rates than their Canadian counterparts.
  • Cashable vs non-redeemable. Cashable GICs let you take your money out before your term without incurring a fee or penalty. Non-redeemable GICs are more set in stone and can cost you a lot of money if you take your investment out before it matures.

      How to compare GICs

      You’ll want to consider the following features when comparing GICs:

      • Term. The length of time that your money will be tied up in a GIC varies, with terms ranging from 30 days to 10 years. Longer terms are beneficial because they typically offer higher interest rates.
      • Interest rates. GICs offer interest rates between 1% and 4%, with most paying out interest on an annual basis or when the investment matures. These interest payments can be added to the balance so that they compound every year or they may be funneled into a different account to become a passive form of income.
      • Minimum deposit. Most lenders require a minimum deposit of at least $500 while some require you to invest as much as $10,000. Keep in mind that you might need to consider other options if you don’t have that kind of cash floating around.
      • Withdrawal conditions. You’ll need to wait until the end of your term to take your money out unless you have a cashable or redeemable GIC. If you need to make an early withdrawal, you could end up paying a penalty or forfeiting the interest you earned on your investment.
      • Suitable duration. If you know you might need quick access to your money at some point, then you should aim for a short-term cashable GIC. If you don’t have any issues with cash flow, you can probably take out a longer-term non-redeemable GIC with a higher interest rate.
      • Easy tracking. Some GICs offer mobile banking apps so that you can check the balance of your account easily. Others offer regular statements and online platforms to help you monitor your savings. Look for a lender that keeps you up-to-date on your account.

      Are GICs worth it?

      Owning a GIC is considered one of the safest ways to grow your assets over time. As part of the fixed-income pool of securities, GICs are often viewed as a necessary but insufficient component of a well-balanced portfolio. When combined with stocks and precious metals, GICs can help you improve your risk/reward profile over time.

      At the same time, there are several drawbacks associated with GICs. Not all pay guaranteed interest (in the case of variable rate GICs), and the asset class has limited upside in an environment of declining interest rates. Unless you are laddering your GICs over several terms, your investment will struggle to keep pace with inflation.

        GIC Pros

        GICs come with a number of features that make them a worthwhile investment to pursue:

        • High interest rates. Enjoy higher interest rates with GICs than you’ll get with most savings accounts.
        • Low-risk investment. Earn guaranteed interest rates and get a guaranteed return on your principal when it’s time to cash out your investment.
        • Portfolio diversification. Use your GICs to balance out your portfolio so that you can continue to build up your savings without taking on additional risk.
        • Tax-free interest on registered accounts. Hold your GICs in a registered account such as a TFSA or RRSP to earn tax-free interest on your savings.
        • Deposit insurance. Relax knowing that your money is protected up to $100,000 by the Canada Deposit Insurance Corporation (CDIC) if your provider is a CDIC member.

        GIC Cons

        GICs also include a handful of drawbacks you should be aware of before investing:

        • Lower return than higher-risk investments. You could end up with a lower return on interest than you might get with more risky investments such as equities.
        • Can’t keep up with inflation. GICs with longer terms are usually unable to keep pace with inflation – meaning you could lose money on them over time.
        • Locked-in funds. You’ll have to lock in your money with most GICs, and you could incur significant penalties if you redeem them before your term is up.
        • Minimum balance. You may need to invest a minimum of $500 or more to sign up for a GIC, which makes this type of investment less accessible for low-income earners.
        • Taxable interest. You’ll pay tax on any interest you earn unless you hold your GIC in a registered account.

        What are GIC terms?

        GIC terms are the length of time you’ll park your money in the fund. Periods range from 30 days to 10 years. In general, the longer you invest, the higher the interest rate you’re entitled to receive (in the case of fixed GICs).

        This type of investment is further broken down into non-redeemable GICs and redeemable GICs. A non-redeemable GIC is when you invest a certain amount of money for a set length of time in exchange for a fixed interest rate at the end of the term. When the term expires, you can either cash in your GIC or renew your term and keep investing.

        A redeemable GIC operates in much the same way, but it lets you withdraw your funds at any time. Your principal is always guaranteed, but you may be required to pay a redemption fee.

        What are GIC issuers?

        When you invest in a GIC, you are giving your money to a financial institution for a specific period of time. The financial institution is the “issuer” of the GIC. In Canada, most GIC issuers are banks, though some are credit unions.

        Variable rate vs fixed rate GICs

        GICs are meant to be low-risk investments that offer guaranteed interest rates, but not all of them operate in this way. When you decide to invest in this asset class, you’ll have the option of selecting a fixed rate or variable rate GIC.

        A fixed rate GIC guarantees you a set interest rate for the duration of your term. On the other hand, a variable rate will fluctuate according to how well the stock or bond markets are performing. So, while you have the opportunity to earn higher interest with a variable GIC, you can’t predict how much interest (if any) you’ll get back.

        Are GICs safe?

        GICs are a very safe investment vehicle and can even be used to help you lower the risk in your investment portfolio. Aside from giving you a guaranteed return on your original investment, GICs are automatically insured with either Canadian Deposit Insurance Corporation (CDIC) insurance or provincial insurance.

        Both types of insurance limit coverage to a set term and amount. For example, CDIC insurance covers up to $100,000 over a 5-year term. The good news is that you don’t have to apply for or pay premiums to get this insurance, and you’ll get an automatic payout from the insurance agency if the bank closes or goes out of business.

        How can I buy a GIC?

        You can buy a GIC through your bank or another financial institution, both in person or online. Keep in mind that most GICs require a minimum investment of $500 while others go as high as a $10,000 minimum.

        Bottom line

        GICs are designed for the cautious investor who wants to get a decent return on the money they put in. If you’re interested in a GIC, just be aware that any money you put in will be locked in for the duration of your term unless you sign up for a cashable or redeemable GIC.

        A-Z list of GIC provider reviews

        Guaranteed investment certificates (GICs) FAQs

        • Like any investment product, a GIC can be used to meet certain investment goals. A well-balanced portfolio typically includes a blend of products and assets that can hedge against risk while meeting short- and long-term investment objectives.

          GICs are beneficial because they are low-risk and secure. If your portfolio contains riskier assets like stocks, GICs can serve to counterbalance that risk with a known return over a set period. If you choose non-redeemable ICs, you can earn up to 2% higher interest on your investment.

          As the name implies, a guaranteed investment certificate is an investment product that "guarantees" your initial deposit and pays a fixed interest payment while you hold it. If you put money into a GIC for five years, your money will earn interest and never depreciate in value—as long as it stays ahead of inflation, that is. A such, a GIC can be one of the safest investment options available.

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