{"id":782609,"date":"2019-07-03T11:50:22","date_gmt":"2019-07-03T15:50:22","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?page_id=782609"},"modified":"2026-03-09T18:33:40","modified_gmt":"2026-03-09T22:33:40","slug":"gics","status":"publish","type":"page","link":"https:\/\/www.finder.com\/ca\/gics","title":{"rendered":"Guide to guaranteed investment certificates (GICs) in Canada"},"content":{"rendered":"

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\u2019re considered a low-risk way to build your wealth.<\/p>

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.<\/p>

In this guide, we\u2019ll explore the different types of GICs available and explain how GICs fit into your savings plan that includes TFSA, RRSP and even RESP. We\u2019ll also show you how to find the best GIC rates in Canada and the other factors to consider when choosing a GIC.<\/p>

What is a GIC?<\/h3>

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.<\/p>

Interest could be paid at regular intervals, such as monthly or quarterly, or when the GIC term ends. When your term expires, you\u2019ll get the interest you earned on your account plus the amount you originally deposited.<\/p>

GICs are generally considered a safe and low-risk way to invest your money, so it\u2019s 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.<\/p>

How do GICs work?<\/h3>

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\u2019re lending money to your bank \u2014 in return for giving them access to your money, they\u2019ll pay you interest at a guaranteed rate.<\/p>

GICs let you earn a higher interest rate than you can typically get with a normal savings account<\/a>. Interest rates can be either fixed or variable, but they don\u2019t offer the same potential high rate of return as investing in stocks or ETFs.<\/p>

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\u2019ll need to accept a lower interest rate and usually pay a penalty for accessing the funds early.<\/p>

What is the average GIC rate in Canada?<\/h3>

According to the Bank of Canada, as of June 25, 2025, the average rates for GICs in Canada are:<\/p>
GIC term<\/th>Average rate<\/th><\/tr><\/thead>
1-year GIC<\/td>2.62%<\/td><\/tr>
3-year GIC<\/td>2.65%<\/td><\/tr>
5-year GIC<\/td>2.9%<\/td><\/tr><\/tbody><\/table>

Choose the best GIC<\/h3>

To help you choose the best GIC for your specific needs, here\u2019s a list of the types of GICs found in Canada, along with a brief explanation of how each type of GIC works.<\/p>

\"bankGovernment guarantees on GICs<\/h4>

The 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.<\/p><\/div><\/article>

Fixed-rate GIC<\/h4>

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.<\/p>

Why invest in a fixed rate GIC?<\/h4>
  • Your principal is protected, making it a safe and secure investment option.<\/li>
  • You know exactly how much interest you\u2019ll earn on the money you put in over the term of your investment.<\/li>
  • Flexible terms, typically from 30 days to 5 years.<\/li>
  • You can balance risk in your portfolio as your cash will be protected from fluctuations in the stock market.<\/li><\/ul>

    Drawbacks of fixed rate GICs<\/h4>
    • The interest you make may be lower than what you might earn by investing directly in the stock market (or in a market-linked GIC).<\/li>
    • Long-term fixed-rate GICs may not be able to keep up with inflation, leading to an overall loss on your investment.<\/li><\/ul><\/div><\/article>

      Laddered Fixed-Rate GIC<\/h4>

      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.<\/p>

      Variable rate GIC<\/h4>

      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.<\/p>

      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.<\/p>

      Market-linked GICs<\/h4>

      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.<\/p>

      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.<\/p>

      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 \u2014 by guaranteeing 100% principal protection \u2014 while taking advantage of the higher return potential of the stock market.<\/p>

      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%.<\/p>

      Why invest in a market-linked GIC?<\/h4>
      • Your principal is protected, so it\u2019s a safer way to earn interest from the stock market and balance risk in your portfolio.<\/li>
      • It can be more lucrative than a fixed-rate GIC, depending on how well your index is performing.<\/li>
      • Short and long-term options ranging from 1\u201310 years<\/li><\/ul>

        Drawbacks of market-linked GICs<\/h4>
        • The interest you make may be lower than what you might earn by investing directly in the stock market (or in a fixed-rate GIC).<\/li>
        • You won\u2019t be able to make changes or rebalance your portfolio when your index is performing poorly.<\/li>
        • Some GICs will hide a \u201cmaximum return\u201d cap in your contract to limit your earnings if the index you invest in performs really well.<\/li>
        • Your issuer will keep a portion of your profits if the fund performs well.<\/li>
        • Formulas used to calculate interest are complex, and it can be difficult to understand why you received (or didn\u2019t receive) a return.<\/li><\/ul><\/div><\/article>

          Registered GIC<\/h4>

          The difference between registered and non-registered GICs comes down to the accounts in which they\u2019re 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).<\/p>

          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.<\/p>

          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.<\/p>

          Non-registered GIC<\/h4>

          Non-registered GICs are exactly the same as registered GICs, but aren\u2019t 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.<\/p>

          Short-term GICs<\/h4>

          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.<\/p>

          Since a short-term GIC matures in a shorter period of time, they\u2019re ideal for investors who want to earn more on their money without having funds locked in for too long.<\/p>

          Long-term GICs<\/h4>

          Long-term GICs usually come with higher interest rates and have terms between 1 and 10 years. If you\u2019re 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\u2019t get access to that cash until the GIC matures.<\/p>

          Foreign currency GICs<\/h4>

          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.<\/p>

          The downside is that, unlike local investments, foreign currency GICs aren\u2019t covered by CDIC insurance, plus they often come with lower interest rates than their Canadian GIC counterparts.<\/p>

          Why invest in foreign currency GICs?<\/h4>
          • Earn money on interest and exchange rates if the Canadian dollar performs poorly.<\/li>
          • You can \u201cbuy\u201d foreign currency when exchange rates are good so that you don\u2019t have to exchange money at lower rates when you travel.<\/li>
          • If you have a foreign income, you can invest it directly without converting it into Canadian dollars.<\/li><\/ul>

            Drawbacks of foreign currency GICs<\/h4>
            • The interest you make will typically be lower than what you might earn on a domestic GIC.<\/li>
            • If the Canadian dollar performs extremely well, you could lose money on your principal investment when you exchange it back to Canadian dollars.<\/li>
            • You won\u2019t be able to make changes or withdraw your funds if the Canadian dollar starts doing really well.<\/li>
            • If you use Canadian dollars to buy a foreign GIC, or a US dollar GIC, you\u2019ll lose money when your bank exchanges your funds into your foreign currency.<\/li>
            • Unlike domestic GICs, foreign exchange GICs aren\u2019t protected by the CDIC.<\/li><\/ul><\/div><\/article>

              Cashable GICs<\/h4>

              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.<\/p>

              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\u2019t allowed. Once the waiting period ends, you\u2019re free to redeem the GIC without incurring a fee or penalty.<\/p>

              The one drawback is that cashable GICs usually come with lower interest rates than traditional GICs.<\/p>

              Why invest in a cashable GIC?<\/h4>
              • It\u2019s a flexible and reliable investment option if you need quick and easy access to your money.<\/li>
              • It offers a guaranteed return for a short-term commitment, which can be useful if you\u2019re looking for liquidity in your investments or anticipate you\u2019ll need funds to make a large purchase in the near future.<\/li>
              • Maximize your returns by cashing out and reinvesting when interest rates are high at no extra cost.<\/li><\/ul>

                Drawbacks of cashable GICs<\/h4>
                • The interest you make on a cashable GIC will be lower than what you can earn on a non-redeemable GIC.<\/li>
                • You may not be able to cash out your GIC for a period of 30\u201390 days, which can cause trouble if you need emergency funds.<\/li><\/ul><\/div><\/article>

                  Redeemable GICs<\/h4>

                  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\u2019t have to wait for a non-redemption period to pass before cashing out.<\/p>

                  Non-redeemable GICs<\/h4>

                  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\u2019ll need to pay a penalty to do so.<\/p>

                  Terms range from 30 days to 5 years, and the longer the term, the higher the interest rate.<\/p>

                  Why invest in a non-redeemable GIC?<\/h4>
                  • Earn 1\u20132% more interest while also protecting your principal investment.<\/li>
                  • Broad range of terms to choose from, typically between 30 days to 5 years.<\/li>
                  • Stay on track with your investment goals, as there will be less temptation to withdraw your funds.<\/li><\/ul>

                    Drawbacks of non-redeemable GICs<\/h4>
                    • Non-redeemable GICs don\u2019t offer a great deal of liquidity, which means you may need to pay a penalty to free up funds in the event of an emergency.<\/li>
                    • Your profits may not be as lucrative as they could be with a market-linked product (provided the stock market is doing well).<\/li>
                    • Long-term fixed-rate GICs may not be able to keep up with inflation, leading to an overall loss on your investment.<\/li><\/ul><\/div><\/article>

                      How to compare GICs: The different features to consider<\/h3>

                      You\u2019ll want to consider the following features when comparing GICs:<\/p>

                      • Term.<\/strong> The length of time that your money will be tied up in a GIC varies, with terms ranging from 30 days to 10 years, but not many banks and online financial institutions offer 30-day and 60-day GICs or terms over five years. Longer terms typically offer higher interest rates but less flexibility.<\/li>
                      • Interest rates.<\/strong> GICs offer interest rates of around 2.62%, with most paying out interest on a monthly or annual basis or when the investment matures. The advantage of GICs is that the interest compounds on longer terms \u2014 so the money earned in year one also accrues interest.<\/li>
                      • Minimum deposit.<\/strong> Many financial institutions require a minimum deposit of at least $100 for registered GICs \u2014 GICs held in RRSPs, RESPs and TFSAs \u2014 and $1,000 for non-registered GICs. Be mindful that contribution room is also a factor when purchasing registered GICs.<\/li>
                      • Withdrawal conditions.<\/strong> You\u2019ll need to wait until the end of your term to get access to your principal investment and your earnings. The exception to that is when you invest in cashable or redeemable GICs.<\/li>
                      • GICs.<\/strong> If there are no provisions to allow you to access money, then an early redemption or withdrawal may trigger a penalty or the forfeiture of any interest earned on the investment.<\/li>
                      • Suitable duration.<\/strong> When purchasing a GIC, keep in mind when you may need the initial invested money. If you require access to these funds in the short term, then investing using a short-term GIC or a cashable GIC may be best.<\/li>
                      • Easy tracking.<\/strong> 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 provider that communicates with you regarding your investments.<\/li><\/ul>

                        Are GICs a good investment?<\/h3>

                        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 \u2014 a conservative, stable investment that can offer a return even during market volatility.<\/p>

                        One advantage of GICs is that the principal sum invested \u2014 your money \u2014 is guaranteed. This means there\u2019s no risk of erosion of principal or loss due to market fluctuations.<\/p>

                        Depending on the GIC you purchase, the quoted GIC interest rate is also guaranteed, which means that despite market conditions, you\u2019ll earn that quoted interest rate when the GIC matures.<\/p>

                        However, all this stability and security does come at a price. GICs don\u2019t offer the same potential for high returns as other riskier investments. Without proper planning, GICs can also underperform, particularly in a higher inflation market.<\/p>

                        Calculate how compound interest affects GICs<\/h3>

                        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.<\/p>

                        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\u2019re investing and the length of time.<\/p>