*Updated August 2, 2018
EQ bank just launched new high-interest rates on their Guaranteed Investment Certificates (GICs) and it is a big win for savers out there. Under the low-interest environment of the last few years and highly depressing savings and GIC rates offered by the big banks, investors (including myself) have pretty much given up on GICs. When inflation rates are taken into consideration, savers have either had to settle for negative or at best paltry returns.
EQ Bank and other online banks have worked at changing the narrative by providing no-fee online-only banking with unlimited and free transactions, savings accounts with better rates, and in some cases, no-fee interest-earning chequing accounts.
EQ Bank’s GIC
The launch of new GIC rates on August 2, 2018, by EQ Bank is a big deal. This is mainly because it signals that consumers will soon start benefiting from recent uptick in the Bank of Canada’s key interest rate. The Big Banks quickly increase their mortgage rates following each rate-hike, but their clients have yet to see this benefit trickle down to their savings accounts and GICs.
What is a GIC?
A GIC is a type of savings/investment account that offers a guaranteed rate of return over a specific period of time. The maturity period of a GIC can vary anywhere from a few months to several years.
A GIC is a low-risk investment since it guarantees your capital and you know how much to expect back as profit.
EQ bank’s new GIC Rates
Short-Term Non-Redeemable GICs
- 3 months: 1.60%
- 6 months: 2.35%
- 9 months: 2.35%
- 15 months: 2.90%
- 27 months: 3.05%
Long-Term Non-Redeemable GIC
- 1 year: 2.80%
- 2 years: 2.95%
- 3 years: 3.15%
- 4 years: 3.20%
- 5 years: 3.52%
EQ Bank GIC rates vs. Competition
A quick look at the GIC rates offered by some EQ Bank competitors show why these new rates are awesome. For example, for a 1-year term, non-redeemable GIC, some of the best rates I could find include:
CIBC: 0.55%; BMO: 0.85%; National Bank: 0.90%; TD: 1.00%; Zag: 1.20%; Alterna Bank: 2.05%; Simplii: 1.69%; Tangerine: 2.50%, Achieva Financial: 2.40%; Motive Financial: 2.20%; Peoples Trust: 2.50%; Implicitly Financial: 2.50%; Oaken Financial: 2.80%.
The disparity in interest rates (returns) is a lot, and EQ Bank has the best offer by far!
Why Choose EQ Bank GICs?
Competitive High-Interest Rates: As shown above, you could be making an additional 2.21% on your GIC investment compared to some big banks (i.e. EQ bank vs. CIBC). If inflation rounds up at around 2% for the year (2018), a 1 year GIC at 0.55% would have returned a negative 1.45%, leaving you with a lower purchasing power.
Low Minimum Investment: You can open a GIC account at EQ Bank with just $100! Most competitors have a $500-$1,000 minimum starting deposit. This makes it possible for virtually anyone to open an account.
Lots of Choices: With so many terms available, including as low as 3 months and up to 5 years, you have flexibility to tailor your GIC investment to meet your financial needs.
Safety: EQ Bank is owned by Equitable Bank which is a member of Canada Deposit Insurance Corporation (CDIC). This means that your deposits are insured up to $100,000 per account.
GICs are a great investment vehicle when you want to save for a short-term goal and desire higher returns than are available on a savings account. Be it a vacation, home down payment, vehicle purchase, or other financial goal, an EQ Bank GIC can be your gateway to increasing your net worth.