The best Guaranteed Investment Certificate (GIC) rates or High Interest Savings Accounts (HISAs) are options for you if you are saving towards a short- to medium-term goal.
For example, say you are planning to buy a home 3-5 years from now. You could put your money in the stock markets or a mutual fund, however, that’s a really risky undertaking.
If the financial markets suddenly tank (as they have in recent times), your funds could lose as much as half or more of their value without warning.
GICs and HISAs are relatively safe havens to park your money when you are going to need it to stay intact and earn at least some return. They are also great for investors with low-risk tolerance.
With these financial products, you enjoy peace of mind knowing that your principal is guaranteed and protected up to a specified amount.
Below, we cover some of the best GIC rates in Canada in 2022.
The Best GIC Rates in Canada
The list below focuses on the most popular GIC-type i.e. traditional, non-registered, fixed-rate, non-redeemable GICs. As you can imagine, none of the best rates are offered by big banks. If you want a great GIC rate, your best bet is an online-only bank or credit union.
Canada Deposit Insurance Corporation (CDIC) offers protection to deposits owned by customers of its member firms up to $100,000, while credit unions are insured provincially, and offer protection on up to 100% of your deposits, regardless of the amount.
EQ Bank GIC Rates
EQ Bank is CDIC-insured via its parent bank, Equitable Bank. It is popular for offering one of the best non-promotional High-Interest Savings Account rates (at 1.65%) and GIC packages.
EQ Bank clients have access to a mobile app that enables banking from anywhere and the minimum deposit for GICs is an industry-low at $100.
Equitable Bank is a member of CDIC and your deposits are protected for up to $100,000. Get more details in this EQ Bank review.
Here are the current best GIC rates offered by EQ Bank:
- 3 months: 1.70%
- 6 months: 2.40%
- 9 months: 3.00%
- 1 year: 4.15%
- 2 years: 4.60%
- 3 years: 4.70%
- 4 years: 4.75%
- 5 years: 4.85%
or Visit EQ Bank for a 1.65% Savings Rate ($150 cash bonus for a limited time).
Motive Financial GIC Rates
Motive Financial is CDIC-insured through the Canadian Western Bank. Founded in 1984, Motive Financial is an online-only bank with great HISA and GIC rates. Its current GIC offerings include:
- 1-year GIC: 4.12%
- 2-year GIC: 4.60%
- 3-year GIC: 4.65%
- 4-year GIC: 4.67%
- 5-year GIC: 4.76%
Read Review: Motive Financial
Oaken Financial GIC Rates
When you purchase a GIC from Oaken Financial, you can choose either Home Bank or Home Trust Company as your issuer. Both financial institutions are separate members of CDIC, so you can enjoy separate insurance coverage for your funds.
Its current GIC offerings include:
- 1-year GIC: 4.05%
- 2-year GIC: 4.50%
- 3-year GIC: 4.60%
- 4-year GIC: 4.65%
- 5-year GIC: 5.00%
Read Review: Oaken Financial
Peoples Trust GIC Rates
Founded in 1985, Peoples Trust offers mortgages, credit cards, GICs, and commercial loans. It is CDIC-insured and offers the following GIC rates:
- 1-year GIC: 4.10%
- 2-year GIC: 4.55%
- 3-year GIC: 4.65%
- 4-year GIC: 4.70%
- 5-year GIC: 4.85%
Read Review: Peoples Trust
Achieva Financial GIC Rates
Achieva Financial is operated by Cambrian Credit Union and deposits are insured by DGCM. It was established in 1998 and offers savings and deposit products in RRSP, RRIF, regular savings, and TFSA accounts. Their current GIC rates are:
- 1-year GIC: 3.60%
- 2-year GIC: 4.00%
- 3-year GIC: 4.10%
- 4-year GIC: 4.20%
- 5-year GIC: 4.45%
Read Review: Achieva Financial
AcceleRate Financial GIC Rates
The parent company for AcceleRate Financial is Access Credit union. Accelerate offers savings and deposit products in non-registered, TFSA, RRSP, and RRIF accounts.
It is insured via DGCM. Current GIC rates being offered include:
- 1-year GIC: 3.25%
- 2-year GIC: 3.65%
- 3-year GIC: 3.85%
- 4-year GIC: 4.05%
- 5-year GIC: 4.35%
Read Review: AcceleRate Financial
Hubert Financial GIC Rates
Hubert Financial is operated by Sunova Credit Union, one of the top 100 credit unions in Canada. Your deposits are insured via Sunova under the Deposit Guarantee Corporation of Manitoba (DGCM).
Its product offerings include savings, TFSA, US$ savings, and investing via VirtualWealth. Current GIC rates include:
- 1-year GIC: 3.25%
- 2-year GIC: 3.65%
- 3-year GIC: 3.85%
- 4-year GIC: 4.05%
- 5-year GIC: 4.35%
Read Review: Hubert Financial
motusbank GIC Rates
motusbank is a digital bank owned by the popular Meridien Credit Union. It offers some of the best savings, GIC, mortgage, and personal loan rates in Canada. Motusbank’s current GIC rates are:
- 1-year GIC: 3.75%
- 2-year GIC: 4.20%
- 3-year GIC: 4.30%
- 4-year GIC: 4.40%
- 5-year GIC: 4.50%
Read Review: motusbank
Ideal Savings GIC Rates
Ideal Savings is owned by Carpathia Credit Union and was launched in 2016. Deposits are insured without limit through Carpathia under DGCM. Its current rates are:
- 1-year GIC: 3.21%
- 2-year GIC: 3.66%
- 3-year GIC: 3.86%
- 4-year GIC: 4.06%
- 5-year GIC: 4.36%
Read Review: Ideal Savings
Tangerine Bank GIC Rates
Tangerine Bank is CDIC insured via its parent – Scotiabank. Tangerine offers a full suite of banking products including mortgages, investments, chequing, savings, GICs, loans, and credit cards.
Its current GIC rates include:
- 1-year GIC: 3.75%
- 2-year GIC: 3.35%
- 3-year GIC: 4.20%
- 4-year GIC: 3.60%
- 5-year GIC: 3.75%
Read review: Tangerine Bank
Compare GIC Rates in Canada
What is a GIC?
Guaranteed Investment Certificates (GICs) are a type of investment that pays you a guaranteed rate of return over a specified period of time.
They are safe investments and as such work well in conservative investment portfolios or can represent some portion of the fixed income component of any portfolio.
GICs are similar to a savings account where you deposit money and are promised an annual interest rate by the bank.
That said, unlike a traditional savings account, a traditional GIC usually locks in your money for the period of time specified in your contract i.e. your funds are not cashable (or redeemable) until maturity.
For example, a 1-year fixed rate non-redeemable GIC means that if you want to withdraw your funds before 1 year has elapsed, you will pay a penalty.
There are GICs that offer more flexibility and allow you to withdraw your money before maturity. These are known as Cashable or Redeemable GICs. The interest rates offered on these GICs are lower than what is available for a similar non-redeemable GIC and an identical term.
The interest rate on most GICs is fixed. However, there are also options to earn variable interest (variable-rate GICs) or even have the return tied to the performance of the stock market (market-linked GICs).
A GIC can be held in registered (TFSA, RRSP, RESP, RRIF) or non-registered accounts.
For more on the basics of GICs, check out my post on GICs and their place in your investment portfolio.
The advantages and disadvantages of GICs are similar to those of high-interest savings accounts. For more information on their pros and cons, read – The Best High-Interest Savings Accounts in Canada.
Types of GICs in Canada
There are many types of GICs on the market. They have various features, investment terms, and payment options. Examples include:
1. Fixed or Traditional GIC
This is the most common type of GIC available. It’s simple – you invest your funds for a fixed interest rate that is paid at specified periods, or at maturity.
2. Cashable or Redeemable GIC
This GIC gives you the option to withdraw your funds or cancel your contract before the end of your term without penalty.
Cashable GICs are good if you want flexibility for accessing funds should you need to. They may come with a brief lock-in period (e.g. a month) when you are unable to cash out.
3. Non-Cashable GIC
Unlike their cashable counterpart, funds are locked in for the duration of your contract. They are also referred to as non-redeemable GICs.
If you want to withdraw funds before a non-cashable or non-redeemable GIC has matured, you will have to pay a penalty fee.
Non-cashable GICs attract a higher return than cashable GICs.
4. Foreign Currency GIC
These GICs are denominated in foreign currency such as the U.S. dollar (U.S. GIC) and can be used as a vehicle to hold your foreign currencies while earning some interest.
GICs denominated in a currency other than the Canadian dollar are not covered by CDIC insurance.
5. Laddered GIC
This GIC-type allows you to stagger the maturity dates of your investment, such that you can take advantage of higher interest rates and fluctuations, while still having access to some of your funds periodically.
For example, say you want to invest $25,000 in a laddered GIC. You can choose to put $5,000 in each of a 1-year, 2-years, 3-years, 4-years, and 5-years GIC.
This way, 20% of your portfolio will mature each year. When your 1-yr GIC matures, you can either cash out, renew it for the same rate, or re-invest for another term with a more attractive interest rate.
Instead of tying down your $25,000 investment in a GIC with one maturity, you ladder it for flexibility and potentially higher return.
GICs come with different terms ranging from a few months to several years.
Popular terms are 6 months, 1 year, 2 years, 3 years, 4 years, and 5 years. Longer terms (up to 10 years) are also available. As mentioned earlier, the longer the term, the higher the interest that is paid.
GICs also come with different interest payment options: Interest may be paid monthly, quarterly, semi-annually, annually, or at maturity.
GIC Investment Options
GICs can come in handy for various investing/savings purposes including:
A. GIC as Regular Savings
GICs can be used to hold funds that you want to keep liquid while gaining some returns in the meantime. For instance, if you plan on keeping cash in your savings account for 1 year before using it, a 1-yr GIC may offer better returns.
GICs may not be appropriate for an emergency fund if it means you’re penalized for wanting to withdraw your funds before the maturity date.
A high-interest savings account may be more suitable for short-term savings goals and may even offer similar or higher interest rates compared to a GIC depending on the term length.
B. GIC in Registered Accounts
You can hold GICs in your registered investment accounts including TFSAs, RRSPs, RDSPs, and RESPs. Depending on what assets you have in your TFSA, it can be tailored to serve as a source of funds for emergency needs.
GICs can fit into most portfolios to account for some of the fixed-income asset allocations.
Are GIC Investments Safe
GICs are one of the safest investments available for conservative/risk-averse investors.
They are guaranteed by the Canada Deposit Insurance Corporation (CDIC) up to $100,000 (principal + interest) per depositor per eligible financial institution.
As long as you don’t have more than $100,000 in GIC in each of your banks, you should be covered if they become insolvent. GICs purchased through some credit unions and other non-bank financial institutions may be insured through provincial deposit insurance plans.
GIC Risk vs. Reward
GICs are also considered safe because your return is usually guaranteed from the start.
If you understand the dynamics between risk and reward, then you know that the higher the potential reward, the higher the risk, and vice-versa.
GICs are low-risk and as such the expected return is often significantly lower than “riskier” options like stocks, mutual funds, ETFs, etc.
Persistent low-inflation rate numbers and generally lower interest rates mean that GIC numbers stay low. If you lock into a long-term GIC (say 5 years) and interest/inflation rates rise, you could start earning a negative return if the inflation rate exceeds your GIC interest rate.
For the potentially higher rates available through the market or index-linked GICs, your expected return becomes variable, increasing your investment risk.
If a GIC is not held in a tax-sheltered account e.g. RRSP or TFSA, tax is due on any interest income earned. This income is taxed like your other regular income, using your marginal tax rate.
GIC Interest Income Taxation Example
If you invest $50,000 in a 1-year GIC that pays 1% interest at maturity, you will earn an interest income of $500. If your marginal tax rate is – say 43.75%, it implies that:
- Interest Income Earned: $50,000 x 1% = $500
- Marginal Tax rate: 43.75%
- Tax Payable: $500 x 43.75% = $218.75
- After-Tax Income: $500 – $218.75 = $281.25
- After-Tax Return: $281.25/$50,000 = 0.56%
A measly 0.56% return has been generated after-tax.
GIC Rates Canada FAQs
Which bank has the best GIC rates in Canada?
The best GIC rates are always changing as banks vary their rates in relation to the Bank of Canada’s benchmark rate, their in-house prime rate, demand for deposits and loans, economic factors, and other factors. In general, you will find the most competitive GIC rates to be offered by online banks like EQ Bank and credit unions.
Can you lose money in a GIC?
GICs are guaranteed investments which means you are guaranteed to get back your principal plus a certain percentage of interest. The returns for market-linked GICs are tied to the performance of the benchmark index or security and your rate of return is not fixed. GICs with terms longer than 5 years are not covered by CDIC insurance and you could potentially lose money if the bank becomes insolvent.
What are the risks of a GIC?
GICs are generally safer than stocks, ETFs, and mutual funds. Some of the risks you face include liquidity risk in that you are unable to cash out your money tied in a non-redeemable GIC before maturity without incurring a penalty. Also, the rate of return on your GIC may not keep up with the inflation rate.
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