Best GICs Rates In Canada 2021

To build wealth, it often takes a little more than just putting a part of your paycheque in a savings account every month. If you make your money work for you, investing is something you may want to seriously consider. 

But if you haven’t got a big appetite for risk, you may want to look into an investment vehicle that offers the opportunity to earn interest on your investment without exposing you to too much risk, and GICs fit the bill.

What Is A GIC?

A GIC stands for a Guaranteed Investment Certificate. Also referred to as “term deposits,” GICs offer a safe way for people to invest their money with no risk. Even if your investment does not end up being fruitful, you will still be able to get your initial investment funds back. But because this type of investment is so low-risk, the returns may not be as high as they may be with riskier investments. 

GICs work somewhat like high-interest savings accounts in that a high-interest rate is typically affixed to the deposit. However, a GIC and a regular savings account differ in terms of how easily accessible the deposited funds are. 

Once you have invested in a GIC, the money is meant to stay put until the term expires. If you withdraw the money early, you could be faced with a penalty fee or may have to forfeit the interest earned, depending on the type of GIC account you take out. With a savings account, on the other hand, you are free to withdraw funds as needed. 

Generally speaking, the longer the term, the higher the rate of return. That’s what makes long-term GIC investments so attractive, especially for those who can part with their capital for a longer period of time. 

You can set up a GIC much like you would any other bank account. You’ll be required to make a minimum deposit, which will vary depending on the bank and the GIC. Deposits can be as low as $500 or as high as a few thousand dollars. Deposits up to $100,000 are insured by the Canada Deposit Insurance Corporation (CDIC), as long as the funds stay in the account for 5 years. 

The principal amount deposited in your GIC will be guaranteed to earn interest as stipulated in the contract. You’ll be required to leave that investment amount in your GIC account for a certain amount of time, during which you’ll be guaranteed to earn interest on the principal amount stipulated in your contract. 

Types Of GICs

There are various types of GICs, which can influence the exact interest rate offered:

Fixed-Rate vs Variable-Rate GICs

Fixed-rate GICs are the most well-known type of GIC and come with a rate that remains fixed over the entire term. A specific amount of interest will be payable at certain periods throughout the term. 

In contrast, a variable-rate GIC comes with a rate that can change throughout the term and is dependent on a changing interest rate benchmark. If the rate increases throughout your term, you’ll make more money, while a decreasing rate means you’ll earn less. 

Short-Term vs Long-Term GICs

GIC terms range in length. Shorter terms can be as short as 30 days to a year, while longer terms can be as long as 5 to 10 years. Generally speaking, the interest rate is higher on longer-term GICs. 

Registered vs Non-Registered GICs

Registered GICs include accounts like RRSPs, RESPs, and TFSAs that allow your savings to grow tax-free. On the other hand, non-registered GICs are independent investments and are taxed, which means you will lose a small amount of interest earned. 

Redeemable vs. Non-Redeemable GICs

With redeemable GICs, you can cash in your proceeds any time after you buy them without being subject to a waiting period. However, you will be subject to early redemption rates. Non-redeemable GICs come with more stringent terms for redemption, which means you can’t withdraw funds until the investment matures.

Market-Linked GICs

Market-linked GICs are tied to the stock market. These types of GICs are a type of hybrid investment product that are part GIC and part stock market investment. Your investment’s performance will depend on how the stock market performs throughout the term of your GIC. Your initial investment deposit is guaranteed, and you have the potential to earn higher returns given the way the stock market behaves. 

Foreign Currency GICs

Foreign currency GICs involve investing in currencies other than Canadian dollars. These types of GICs can help you protect your money from fluctuations in the Canadian dollar. If it’s likely that the Canadian dollar will lose value compared to other currencies in the near future, a foreign currency can help you protect your capital from this devaluation. 

Features Of A GIC

There are a handful of features that you may want to learn about to help you get familiar with GICs:

Term

The money you deposit into a GIC will need to remain in the account for a certain amount of time as specified in the contract, which is known as the “term.” GIC terms can be as short as 30 days to as long as 10 years. Once your money has been deposited, it should remain in the account to earn the interest rate promised and stipulated in the contract. 

If you choose a 3-year term, for instance, the funds must remain in the GIC for 3 years until the term expires. The longer the term, the longer your money will need to sit in the account. That’s why you should take the time to make sure you’re comfortable with not having access to that money for the term length since it won’t be as easily accessible as it would be in a regular savings account. 

Learn how inflation can affect your savings.

Interest Rate

The interest rate is what will allow your money to grow as it sits in the GIC. The higher the rate, the faster your money will grow. The interest rate is a crucial feature to consider before you take out a GIC. 

Interest earned on the deposited amount is usually paid on an annual basis or at maturity. The interest payments can be added to the balance of the GIC so that the money can build even faster until the term expires. Otherwise, you may have the option to use these payments as a passive income by paying out the interest into another account. 

In general, shorter terms usually have lower interest rates, while longer terms typically have higher rates.

Cash Out Conditions

As noted earlier, you will usually have to wait until the GIC’s maturity date before you can withdraw the funds in the account. After the term expires, you can access the original principal amount, plus interest earned. But if you withdraw early, you will likely have to forfeit any interest earned and/or pay an early withdrawal fee. 

However, you may be able to withdraw funds from your GIC account earlier with a cashable GIC. Since there are different types of GIC accounts available, you should find out more about early cashouts with your GIC if there is a chance that you may need to access the money prior to the end of the term. 

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Is A GIC Insured? 

If you bought your GIC at a major Canadian bank or credit union, your GIC will be insured by the CDIC or another insurance company. That means you will get all your money back if the bank goes under or cannot pay you when your GIC matures. The coverage you receive is based on the value and type of GIC you buy. 

Each province also has its own insurance offerings for community banks. For example, an Ontario-based credit union may be insured by a province-based insurance company that will guarantee GICs. 

Cost Of Investing In A GIC

There are no fees or commissions charged for GICs. When you buy a GIC, you’ll have the benefit of earning the promised interest with no deductions. That said, you could lose some of the interest accrued on your GIC if you cash out early on a non-redeemable GIC. Also, you may be on the hook for paying a transfer-out fee if you transfer your GIC to another financial institution. 

Why Invest In A GIC?

There are a handful of reasons why you may want to consider adding a GIC to your investment portfolio, including the following:

• Guaranteed earnings. With certain investments, there is a risk that you will not make any money or even lose your initial principal amount. But with GICs, your principal and interest is guaranteed over the term of the GIC. 
• Insurance. By investing in a GIC with a major financial institution in Canada, you can rest assured knowing that your money is safe in the event that the bank ever falters thanks to insurance with the CDIC or other entity. As such, your money is guaranteed for up to $100,000. And if you have your GICs in a TFSA, RRSP, or a non-registered account, up to $300,000 will be protected.
• Minimize volatility. With some investments, there is a certain degree of volatility involved, which could impact the value of your investment. But with a GIC, your investment is stable. The interest rate you are promised will remain as such throughout the term, so there is no fluctuation involved. 
• Many options. You have a lot of choices when you invest in a GIC. For instance, you can choose from a variety of terms, as well as between redeemable and non-redeemable GICs. There is also the option to go with market-linked GICs that let you take part in the stock market index’s increases. You can also buy a GIC for your TFSA, RRSP, RESP, LIRA, or RRIF thanks to the flexibility of this type of investment vehicle. 

Best GIC Rates

GIC rates are based on the type and term. We’ve listed the best GIC rates based on short-term and long-term GICs with various banks. 

1 Year Term

	Rate	Min Investment	GIC Type
Oaken Financial	1.65%	$1,000	Non-registered
Tangerine	0.95%	None	Registered
TD	0.45%	$1,000	Registered and non-registered
CIBC	0.68%	$500	Cashable, escalating rate
Motive Financial	1.50%	$1,000	Non-redeemable
MAXA Financial	1.70%	$500	Registered
EQ Bank	1.50%	$100	Non-redeemable
Scotiabank	0.6%	$500	Non-registered

5 Year Term

	Rate	Min Investment	GIC Type
Oaken Financial	2.10%	$1,000	Non-registered
Tangerine	1.25%	None	Registered
TD	3.55%	$1,000	Registered and non-registered Stepper GIC
CIBC	2.65%	$1,000	Escalating rate
Motive Financial	2.00%	$1,000	Non-redeemable
MAXA Financial	2.10%	$500	Registered
EQ Bank	1.80%	$100	Non-redeemable
Scotiabank	1.1%	$500	Non-registered

Oaken Financial

Oaken Financial is an online bank in Canada that offers GICs, as well as high-interest savings accounts. While the bank is predominantly online there are a handful of physical branches in major cities across Canada. The online bank is insured by the CDIC, so eligible funds are safe and secure. 

Oaken Financial offers both short-term and long-term GICs, both for registered (RSP, RIF, TFSA) and non-registered plans. Right now, Oaken’s GIC rates range from 1.50% to 2.10%, depending on whether they are short- or long-term and based on the exact term length. 

Tangerine

One of the more well-known online-only banks in Canada is Tangerine, once named ING Direct and now an arm of Scotiabank. Holding funds in a Tangerine account – including GICs – means your money will be protected by the CDIC. 

While Tangerine may be well-known for its no-fee chequing account, it also offers GICs at competitive rates with no fees or service charges. Currently, Tangerine’s GIC rates range from 0.5% for a 90-day GIC to 1.25% for a 5-year term. 

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TD Bank 

TD Bank is one of Canada’s larger banks and offers a myriad of banking products to Canadians. TD’s GIC offerings are vast, making it easy to choose one that best suits your needs. Terms range from anywhere between 90 days to as long as 5 years and come with terms as high as 3.55%.

Right now, TD’s Special Offer GICs include a 100-day term with up to 0.30% in interest earned and an 18-month term with up to 0.75% in interest earned. TD Canadian Banking & Utilities GIC is another featured GIC that comes with a 3-year term and interest up to 12.00%. 

CIBC

CIBC is one of Canada’s biggest banks and has branches, ATMs and corporate offices all over the country. It’s widely regarded as one of the more trusted names in banking in Canada with over 11 million clients, and offers everything from personal, to business, to commercial banking, to wealth management products.

Like TD Bank, CIBC offers a wide range of GICs, both for registered and non-registered accounts, with terms that range from as little as 30 days up to 5 years. Currently, CIBCs featured GICs include the Bonus Rate and EasyBuilder LIF GICs, both of which are non-registered and offer rates as high as 1.150% for longer terms. 

Motive Financial 

Motive Financial is an online-only bank that offers many of the conventional banking products that traditional big banks offer, including chequing, savings, RRSP, TFSA, and GIC accounts. The bank offers clients a sense of security thanks to its affiliation with CDIC that insures up to $100,000 in deposits per customer. Motive Financial offers competitive rates on its GICs, which range from 1.50% to 2.0% for terms from 12 months to 5 years. 

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MAXA Financial

MAXA Financial is an online bank and is a subsidiary of Manitoba-based Westoba Credit Union, which is a member of the Deposit Guarantee Corporation of Manitoba (DGCM). Canadians with a MAXA account can do their banking via mobile apps downloaded for iOS and Android devices, as well as through online banking.

The digital bank offers some of the most competitive rates for its high-interest savings account and GIC products for RRSP, TFSA, and RRIF accounts. Right now, rates for MAXA’s GICs range from 1.70% to 2.10% for terms ranging from 1 year to 5 years. 

EQ Bank

EQ Bank is one of the newer online banks in Canada, though their parent company is Equitable Bank, a large Canadian financial institution that’s been around since the 1970s and is insured by the CDIC. Deposits up to $100,000 are insured as a result. EQ Bank is known for its high-interest savings and GIC accounts, which offer clients a way to earn a healthy interest rate on deposits.

EQ Bank’s GIC rates are among the highest in the country. Right now, the bank’s GIC rates range from 1.50% to 2.70% for terms as short as 3 months and as long as 10 years. These are very impressive rates compared to most other GIC rates from other Canadian banks. Plus, the minimum amount needed to invest is just $100, making EQ Bank’s GICs very accessible.

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Scotiabank

Scotiabank is another large, well-known Canadian bank that offers a plethora of banking products, including GICs. What makes Scotiabank unique and stands out from other big banks is its blend of various products typical of a large bank with innovative digital aspects that makes banking more accessible and cost-effective. 

Right now, Scotiabank’s GIC offers include a 0.90% rate on a 9-month term, 1.00% on a 15-month term, 1.01% on an 18-month term, and 1.21% on a 21-month term. The first three are redeemable, and therefore may be cashed in at any time, while the last is non-redeemable. 

Best Long-Term GIC Rates

	Interest	Minimum Deposit	GIC Term
RBC Non-Redeemable GIC	0.70%	$1,000	3 years
CIBC Cashable Escalating Rate GIC Non-registered	2.000%	$500 to $99,999	5 years
Tangerine Non-registered (GIC)	1.20%	–	5 years
BMO GICNon-registered	1.4%	$1,000	10 years
TD non-registered GIC	0.85%	$1,000	5 years
Simpli Financial Registered GIC	1.20%	$100	5 years
EQ Bank high interest GIC	2.00%	$100	10 years

Why Invest In A Long-Term GIC?

Long-term GICs come in terms of 1 to 10 years. There are a few reasons why a long-term GIC may be worth considering:

• Higher Rate Of Return – While GICs, in general, are not known for their high returns because of their low-risk profile, they usually offer higher rates of return compared to short-term GICs. If you’re comfortable parting with your money for at least a year, then a long-term GIC can help you earn a little more money on your capital. 
• Guaranteed Returns –  A long-term GIC allows you to earn interest on your deposit and guarantees that you will at least receive your initial investment. That’s why this type of investment is so safe and attractive to investors without an appetite for risk.
• Add Them To Your Investment Portfolio – Long-term GICs can be a great way to diversify your investment portfolio and may serve as an ideal low-risk addition to your investments. 
• CDIC Insurance – If you choose a GIC term of up to 5 years, up to $100,000 of your deposited amount will be insured by the CDIC.

Best Short-Term GIC Rates

	Interest	Minimum Deposit	GIC Term
Scotiabank	0.20%	$5,000	30 days
BMO Cashable 90 Day GIC	0.40%	$5,000	90 days
EQ Bank High Interest 90 Day GIC	2.33%	$100	90 days
HSBC 90 Day GIC	0.95%	$5,000	90 days
Tangerine USD 90 Day GIC	1.00%	$0	90 days
Tangerine 180 Day GIC	2.25%	$0	180 days
Oaken Financial	1.40%	$1,000	1 year

Why Invest In A Short-Term GIC?

Short-term GICs come with terms that usually range from 30 days to 364 days. There are plenty of perks that come with investing in a short-term GIC:

• No Long Term Commitment – A short-term GIC is more suitable for those who want to guarantee their original investment but aren’t comfortable parting with that money over the long term. If you have a lump sum of money that you’d like to earn some interest over a short while, a short-term GIC may be best.
• For insurance, perhaps you’re looking to put a down payment on a home in a few months but want the opportunity to put a larger down payment than what you currently have. In this case, you could take out a 6-month GIC and deposit the funds you currently have to earn some interest before you make an offer on a home and take out a mortgage to finance it. 
• Guaranteed Money Back – A short-term GIC lets you earn some interest while guaranteeing that your initial investment will be returned to you. That’s what makes this type of investment so safe, unlike other investment vehicles where not only is the return not guaranteed, but neither is your original principal. With high-risk investments, you risk putting your money away and not getting it back. 
• Reinvest Your Principal Sooner Rather Than Later – Since you will be able to access the money after just a short time, a short-term GIC is considered much more liquid than a long-term GIC. In this case, you won’t have to tie up your money for a long time, which is especially important if you’ll need that money sometime soon or have another investment opportunity that you want to take advantage of and need that principal amount to invest elsewhere. 
• Security Of CDIC Insurance – GICs with terms less than 5 years are insured by the CDIC, so you can have some peace of mind knowing that your funds are protected. 

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Final Thoughts

There are plenty of places to buy a GIC, and each financial institution offers its own rates and types of GICs. Do some comparison shopping before you buy a GIC to make sure the product you purchase best suits your needs while providing you with the fastest way to grow your money.