TD GIC review

If you want to lock in a low-risk investment that offers a guaranteed return on your principal, then you might like to check out a TD GIC. This Big Five Canadian bank offers cashable and non-redeemable GICs with your choice of fixed or variable rates. You can hold these investments in registered or non-registered accounts and you’ll get automatic insurance on any deposit up to $100,000.

What is a TD GIC and why should I consider one?

A TD Guaranteed Investment Certificate (or GIC for short) is a low-risk savings plan that offers a guaranteed return on your principal investment. If you go with a non-redeemable GIC, you’ll need to lock your investment in over a specific period of time. If you want more flexibility with your funds, a cashable GIC can be cashed in at any time without incurring a penalty.

You’ll earn a fixed or variable interest rate on all of TD’s GIC products without losing any of your principal investment. For this reason, TD GICs can be a safe haven for more-conservative investors who don’t want to be exposed to the possibility of losing cash due to market fluctuations.

Types of TD GICs

TD offers many different types of GICs.

Cashable GICs

With a cashable GIC, you can take your money out at any point without incurring a fee or penalty. Most of TD’s cashable GICs offer a fixed interest rates for a term lasting from one day up to five years. The TD GIC is unique because it offers higher interest rates with each passing year, maxing out at 0.5%.

These investments can be a great way to save for short-term goals like wedding expenses or a vacation abroad. They’re also a good way to earn interest from your “rainy day” or emergency fund without tying your money up in the long term.

Market-growth GICs

TD’s market-growth GICs give you fluctuating interest rates tied to the performance of a specific index in the stock market. TD offers variable-rate products linked to the performance of some of the best performing companies in Canada and the US, as well as several of Canada’s top banks.

These products allow you to lock in a guaranteed minimum return on investment. You can also earn interest rates as high as 25% if your index does really well. Just be aware that the rates on offer are spread over the course of your term and aren’t an annualized rate. That means that your actual earnings per year will be much lower than what’s advertised.

TD GIC

The terms for redemption on the TD GIC are often quite strict, meaning you won’t be able to withdraw funds until your investment matures. TD offers short-term non-redeemable GICs from 30 to 270 days too. These can be a good investment if you want to make a quick buck on money you plan to use in the near future.

You can also get a long-term simple or compound interest GIC, with returns even higher returns over five years. But these rates are less lucrative than other products offered by TD, so they might not be the best fit if you’re looking to maximize your savings.

US dollar GICs

TD also offers cashable and non-redeemable GICs in US dollars. This means you’ll earn interest on your investment in US dollars, which can be beneficial if the Canadian dollar is on a long-term downward trend.

These investments can be handy if you want to “buy” foreign currency when exchange rates are good so that you don’t have to exchange money at lower rates when you travel. They can also be a suitable option if you have a foreign income that you would rather invest directly without converting into Canadian dollars.

Why should I invest in a TD GIC?

• Low-risk product. TD promises a guaranteed return of your principal investment on all of its GICs. Unlike other banks, it also gives you a minimum return on interest for market-linked products. This means you won’t lose any of the money you put in due to fluctuations in the stock market and you’ll also earn a minimum return, no matter what.
• High return on investment. The amount you can earn in interest will depend on which product you choose to invest in. Cashable and non-redeemable GICs offer lower rates of interest, with most sitting below 2%. Market growth rates tend to be a little bit higher if you get the maximum return on interest, which can be as much as 5% per year or even greater.
• Many different terms. TD offers a number of different terms so you can lock your money away for as long as you like. If you want to make a short-term investment, you can look into its non-redeemable GICs for terms as short as 30 days. If you want a higher return on investment, you should put your money in for longer (with terms lasting up to five years).
• Deposits are insured. Any money you put into your GIC (up to $100,000) is insured through the Canada Deposit Insurance Corporation (CDIC) for terms that are 5 years or less. This means you’ll be protected if TD has to file for bankruptcy or can’t pay back your money for any reason.
• Easy access to customer service. TD provides customer service through many different channels, so you can troubleshoot any issues you might have quickly and efficiently. You can also manage your investments over the phone, online and in person (provided you live close to a branch).

What should I look out for?

• High minimum investment. You’ll be required to invest as much as $500 for registered accounts and $1,000 for non-registered accounts. This is higher than what’s required from other providers.
• Low return on short-term GICs. Short-term GICs offer a particularly low return, but are the most flexible.
• Difficult to cash in early. You won’t be able to cash in on TD’s non-redeemable GICs before they mature. This can make it difficult to access your funds in case of an emergency.
• Unable to cope with inflation. Long-term fixed-rate GICs offer between 1% and 3% on interest, but they aren’t designed to keep up with inflation.
• Interest subject to taxation. Unless you invest in a registered GIC (like an RESP or RRSP), you’ll pay taxes on any interest you make.

How to apply for a TD GIC

If you’ve compared a number of GIC providers and think a TD GIC would be the best fit for you, you can apply online in a matter of minutes. Before you apply, make sure you meet the eligibility requirements and have all the relevant documents on hand.

Eligibility requirements

To apply for a TD GIC, you will need to meet the following criteria:

• Be a Canadian citizen or permanent resident who is at least 18 years old (19 in some provinces)
• Be a member of TD Canada Trust

You will also need to provide the following documents and information:

• Your name, residential status and contact information
• Your social insurance number and date of birth
• Your email address and phone number

How can I buy a TD GIC?

It’s easy to buy a GIC directly from TD by applying online. You can also use the table above to get a better idea of the terms and rates on offer for several products. If you find a rate you like, you can click through to TD’s website to register as a member. Just remember that most GICs require some kind of minimum investment.

How does TD compare to other banks?

TD Bank is a Big Five Canadian bank with a decent reputation. It has over 1,150 branches across Canada so it’s easy to do your banking in person. It has also received many awards for customer service and offers easy, convenient Internet banking with mobile options.

TD ratings, reviews and complaints

TD has a wide range of ratings online that range from very good to not so good. Customers seem to appreciate the online banking portal and the ease of transactions. But many voice concerns over hidden fees and inadequate customer service. TD also needs to work to resolve low ratings from customers on sites like Trustpilot and Consumer Affairs.

Bottom line

TD offers a number of GICs with flexible terms and competitive rates. You can learn more about these products by speaking to a TD adviser or by clicking through to its website on the table above.

Frequently asked questions about TD GICs

• Do I need to be a member of TD to invest in a GIC?

  Yes. You’ll need to have an account and hold cash with TD if you want to invest in one of its GICs.

• How often will interest be added to my GIC?

  You should be able to choose how often you want your interest compounded when you purchase your GIC. For example, if your interest is compounded bi-annually, it will be added to your initial investment twice per year.

• What happens when the term for my GIC ends?

  When your term ends, you can either cash your money out and deposit it into your bank account or roll it over into a new GIC to continue earning interest.

• Can I take my money out before my GIC matures?

  You can take it out without a penalty if it’s a cashable GIC. For non-redeemables, you’ll pay a penalty and risk losing the interest you accumulated on your investment, depending on the product.

• Do I have to pay tax on my TD GIC?

  It depends on whether you choose a registered or non-registered product. If your GIC is held in a registered account like a TFSA, RRSP or RESP, then you won’t have to pay tax on any interest earned from your GIC. If not, you’ll have to declare the interest when you file your taxes.

• I'm not a Canadian resident, can I still open a GIC?

  No. TD requires you to live in Canada and supply a Canadian address in order to open a GIC.

• Can I apply online?

  Yes, you can apply online via the TD website.