Cashable GIC guide

Apply for a cashable GIC to get a reliable return on your investment with flexible terms for early redemption.

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Man looking outside window thinking about how his investment in a cashable GIC will benefit his family's future and protect his principal.

A cashable GIC (or Guaranteed Investment Certificate) is an investment product that offers competitive rates and flexible terms for early redemption. This means you can invest your money for as long as you want, but you won’t be charged a penalty if you need to dip into your savings before your GIC matures.

Find out more about how these redeemable GICs differ from non-redeemable GICs and learn how to compare products to find the best fit for you.

How do cashable GICs work?

A cashable GIC, also called a redeemable GIC, is a Canadian investment product that allows you to access the money you invest before your term is up without paying a fee. The main benefit of this type of investment is that you’ll earn a guaranteed return on your principal but you won’t have to worry about paying a penalty if you need to take your money out early.

Most redeemable GICs offer a 1-year term with a 30- to 90-day “cooling off” period before you can access your investment. From there, you won’t be charged a fee to take money out. Non-redeemable GICs, on the other hand, are a little bit more strict about when you can take cash out and they typically charge a penalty for early redemption.

While a cashable GIC can be a suitable option for people who need quick access to cash, it also comes with lower interest rates. Depending on the amount of money you have invested, you may actually make more if you invest in a non-redeemable GIC with higher interest rates, and pay the penalty for early redemption if you need to take your money out.

Why invest in a cashable GIC?

A cashable GIC is a flexible and reliable investment option if you need quick and easy access to your money. It offers a guaranteed return for a short-term commitment, which can be useful if you’re looking for liquidity in your investments or anticipate you’ll need funds to make a large purchase in the near future.

These types of investments can also be used strategically to help maximize your returns when interest rates go up. This is because they allow you to cash out and re-invest in higher interest rate GICs at no extra cost. They are also often used as a short-term investment plan for those who want to earn a decent return on emergency or “rainy day” funds.

How to compare cashable GICs?

Cashable GICs can be compared using a number of different features:

  • Fixed or variable rate. You will typically earn a static return of 0.5-2% on your investment with a fixed rate GIC. Interest rates for market-linked GICs will fluctuate according to how well the stock market is doing.
  • Length of term. Most cashable GICs come with a one-year term, although you may be able to find a longer or shorter term with some issuers.
  • Length of uncashable period. You’ll typically have to wait for a period of 30-90 days before you can take money out of your investment.
  • Minimum investment. You may be able to start a cashable GIC with as little as $100, but most require at least a $500 investment.
  • Payment frequency. Most cashable GICs are paid out when they reach maturity (typically at one year) but you may be able to work out a monthly payment plan.
  • Renewal process. Some cashable GICs are renewed automatically on maturity while others will need to be cashed out or re-invested in a new product.

Drawbacks of cashable GICs

Cashable GICs are relatively low-risk investments but there are a couple of drawbacks you should watch out for.

  • Lower interest. The interest you make on a cashable GIC will be lower than what you can earn on a non-redeemable GIC.
  • Uncashable for up to 90 days. You may not be able to cash out your GIC for a period of 30-90 days, which can cause trouble if you need emergency funds.
  • Interest subject to taxation. Any interest you earn on your GIC is subject to taxation if the GIC is held outside of your TFSA, RESP or RRSP.

Bottom line

Cashable GICs are a suitable option if you’re looking for a flexible investment with a guaranteed return. Find out more about how these products work and learn how to compare providers to find the best deal. If you’re looking at considering non-redeemable GICs, check out our guide here.

Frequently asked questions about cashable GICs

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