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Best GICs in Canada in 2024

Guaranteed investment certificates are a viable option that is becoming increasingly popular among Canadians. For one, they allow you to invest your money without taking on too much risk. Let's face it; no one wants to put their hard-earned savings into an investment that could potentially leave them with less money than they started out with. So, how does a GIC work?

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Last Updated: Jun 04, 2024

Compare 5 Best GICs in Canada

5 Results

#1 Choice
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Tangerine Bank GIC

$0
Monthly Fee
1%
Interest Rate
  • No monthly fees
  • Easily move your money at any time
  • Earn 1% interest on every dollar everyday
Pros & Cons
Extra Details
Popular
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EQ Bank GIC

4.35%
5 Year Registered
5.05%
1 Year Non-registered
  • Some of the best rates in the market
  • High growth
  • Guaranteed returns
Pros & Cons
Extra Details
Best Value
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TD Bank GIC

3%
1 Year Cashable
5.05%
18 Month Non-Cashable
  • Earn up to 4% on a 100 day GIC term
  • Get a guaranteed rate of return
  • 24/7 Banking
Pros & Cons
Extra Details
Get Started

Meridian Credit Union GIC

4.3%
5 Year Fixed Rate
3%
1 Year Cashable
  • Guaranteed, low risk investing
  • 1-year cashable GIC - 3%
  • 5-year fixed rate GIC - 4.3%
Pros & Cons
Extra Details
Get Started

Scotiabank Savings Accelerator Account

$0
Monthly Fee
0.75%
Interest Rate
  • Available to add on to any non-registered or registered plan
  • No monthly account fees
  • No minimum balance required
Pros & Cons
Extra Details

Best GICs in Canada in 2024

A guaranteed investment certificate or GIC is a low-risk, safe, and secure investment where you don’t have to concern yourself about losing your money.

It is like a normal savings account in the sense that you’re given interest on the money deposited. A simple difference between a savings account and a GIC account is the duration.

This article will discuss the benefits of investing in GICs, the different types of GICs available and how to choose the right one for you. If you’re looking for a safe, low-risk investment option that can provide a steady income stream, then GICs might be the right choice.

What is a guaranteed investment certificate?

GIC, often referred to as term deposits, is a risk-free and safe investing option. With a GIC, you deposit your funds at a bank or other financial institution for a certain length of time (referred to as the “term”).

During this time, they promise to repay your principal (the amount you initially invested) and pay you interest. GIC durations range from 30 days to 10 years, and normally, the longer you leave your money, the more interest you’ll earn.

Your interest and money are trapped in a guaranteed investment certificate for the term period. Because of this, you can be confident that your interest rate won’t suddenly reduce (as it may with savings accounts).

This can be due to economic changes or a bank’s prime lending rate. Plus, you also won’t be able to withdraw your money before the term is over. GICs are excellent alternatives for risk-averse investors who want to protect themselves from the swings of the stock market.

best gics in canada - comparewise

The best GICs in Canada

The best GIC for you will depend on what you’re searching for. There are several Canadian banks, credit unions, and other financial organizations from which to pick. Other things to consider include the GICs interest rate, type, term length, and whether or not it can be stored as a registered account.

TD Bank

TD’s “normal” GIC rates are often not much to get excited about. However, the Market Growth GICs that TD provides can be held in both registered and non-registered accounts. Plus they are a very enticing selection.

These GICs provide very high potential returns (but don’t have a guarantee) based on the performance of the underlying assets it links them to. It guarantees both principal investment and a respectable interest rate.

EQ Bank

When it comes to GIC rates, EQ Bank is among the best financial institutions. This is especially for individuals who don’t mind delaying access to their money. EQ Bank is one of the few organizations in Canada that offers GIC terms up to 10 years.

Their interest rates tend to increase as term lengths increase. In light of this, you must first open an RSP Savings Account or TFSA Savings Account if you’re interested in a TFSA or RSP GIC.

Oaken Financial

In Canada, Oaken Financial has regularly provided among the highest guaranteed investment certificate rates. They offer commercial, non-registered, and registered GICs. They also offer short- and long-term GICs such as TFSAs, RSPs, and RIFs. Home Bank and Home Trust issue Oaken Financial GICs, plus they’re CDIC members.

Meridian Credit Union

In comparison to some of its rival Canadian credit unions, Meridian typically offers slightly lower GIC interest rates. However, one of the unique features of Meridian’s GIC lineup is the wide range of GICs available for selection.

They include cashable GICs, principal-guaranteed index-linked GICs, and fixed-rate GICs. It also has an unusual “Raise the Rate” GIC that allows the account holder to raise their GIC rate if Meridian’s rates go up.

Scotia Bank

For one of the Big 5 banks, Scotiabank offers GIC interest rates that are relatively high. It gives its best rates to customers who combine their GIC with a Scotiabank Preferred or Ultimate banking package.

There are both redeemable and non-redeemable GICs available, with maturities ranging from 30 days to 10 years. Depending on the GIC, the minimum investment varies and ranges from $500 to $5,000.

Tangerine Bank

Tangerine Bank is a Canadian direct banking division of Scotiabank. It provides free checking accounts, tax-free savings accounts, and other personal finance solutions. They frequently praised Tangerine for having the greatest customer service in the Canadian banking sector, along with PC Financial.

Pros and cons of GICs

As with every other thing, GIC has its strengths and weaknesses. Let’s have a quick look at them.

Pros of GICs

Some strengths of guaranteed investment certificates include the following:

  • The first is that it is a very secure investment.
  • Availability of different GIC rates to choose from.
  • A starting investment of $500
  • Higher interest amounts to even more than a savings account.
  • Opening a GIC account is free.
  • It has a higher rate as compared to government-issued bonds.

Cons of GICs

Having seen its strengths, what then are the weaknesses of GICs?

  • There is a penalty attached to early withdrawal.
  • The market rate influences its interest rate, which can cause it to be low.
  • There are chances that your money loses value with inflation if you lock it at a low rate for a long time.
  • Lock in your money for some years for the best GIC rates in Canada.
best gic accounts in canada - comparewise

How do GICs work?

GICs provide interest over a certain time and guarantee the money you invest in them. Also, GICs have fixed terms and fixed interest rates, so you will know exactly how much you will earn from your investment.

For instance, if you put $2,000 into a two-year GIC paying 2% interest, you could withdraw $2,080 after the period.

Both cashable and non-cashable guaranteed investment certificates are available. You could cash in your certificate before the term expires if you have a cashable GIC. Then you’d have to wait until the end of the term to withdraw funds from a non-cashable GIC.

The financial institution may impose fees if you redeem a non-cashable GIC before the period is through. This is comparable to the early withdrawal fee that American banks may impose on customers who take money out of a CD before it matures.

The financial institution providing the GIC can affect how rates are determined. Options for GICs include:

  • Market-linked certificates
  • Fixed-rate certificate
  • Foreign currency certificate
  • Variable-rate certificate

A registered or non-registered account may hold a guaranteed investment certificate. According to Canadian tax legislation, registered accounts have tax-deferred or tax-sheltered status.

Therefore, earnings on GICs held in a registered account would have a tax on them when the money is withdrawn. GIC earnings in non-registered accounts have the same annual taxation as other types of income.

Types of GICs

The right knowledge of the different GICs will assist you in choosing the best one for you. Below are the different GICs available:

Cashable GICs

This type of GIC allows you access to your money before its maturation but after a specific lock period. We mean that you cannot access your money until its closed period elapses, usually 30-90 days. You’ll be paid your money even if its term isn’t up, although they will pay interest for only investment time.

Fixed-rate GICs

Usually, when people discuss guaranteed investment certificates, they’re talking about fixed-rate products. Since they pay a fixed rate of interest based on the terms of the contract and the amount you deposit, these GICs are simple to understand.

For instance, if you put $20,000 into a one-year GIC with a 3.50% interest rate, at the end of the period, you would have $20,350.

Redeemable GICs

This GIC is redeemable before its maturity. A forfeit of interest rate, the result or effect of the interest rate depends on the financial institution. It is an acceptable option for investors looking at a higher return rate who wants access to their money.

Registered and Non-registered GICs

Both registered and non-registered accounts are capable of holding guaranteed investment certificates. Deposit-taking institutions protect non-registered accounts by keeping money in them in a safe place, like a bank account.

Your investments can grow tax-free in registered accounts, such as Tax-Free Savings Accounts (TFSAs). It can also grow the same way in Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs).

The government encourages Canadians to save a larger percentage of their income through the incentives associated with these accounts.

Variable rate GICs

Variable-rate Interest rates on guaranteed investment certificates may change during the term. This benefits you when interest rates are climbing and against you when they fall.

The financial institution’s prime rate determines the interest to be paid on a GIC subject to change.

Short-term GICs

For those who want to prioritize liquidity and have a short-term savings goal, this GIC is a fantastic choice. They mature in under a year and have a stated rate of interest that guarantees the principal.

Long-term GICs

As opposed to short-term, long-term GICs have periods of one year or more and often have higher interest rates. This is ideal for investors who want to use their GIC as a monthly passive income or who have long-term savings goals.

Foreign Currency GICs

Just as the name implies, a GIC in a foreign currency (usually USD) is ideal for Canadian investors who travel outside frequently. This means you can purchase a GIC in US dollars or foreign currency.

 This may be a practical approach to generate interest while safeguarding your money from currency changes. You can decide to invest in foreign currency GIC to hedge against a drop in the Canadian dollar’s value. Using this type of GIC is a fantastic approach to saving for a foreign trip.

Market or Equity-linked GICs

Guaranteed investment certificates that are equity- or market-linked are based on the stock market. Instead of having a set interest rate, their return is based on the performance of an index. This might be a more narrow index or the entire stock market.

Your return, in this instance, is based on the market index’s performance. These GICs are great for investors who want access to the market’s greater return on capital without putting their capital in danger.

best gic rates in canada - comparewise

Other things you should know about GICs

Here is some additional information you should know about guaranteed investment certificates.

  • A minimum of $500 or $1,000 is required for some GICs investments.
  • Typically, there are no charges to open a GIC account.
  • Most GIC accounts have a fixed rate (although a few are variable). A term may be between 30 days and 5 years.
  • Although there is no penalty for taking money out early with a redeemable or cashable GIC, interest rates are lower.
  • Most of the time, CDIC insurance covers savings in GICs, but only for a maximum of five years.
  • If you have an RRSP, TFSA, RESP, or RRIF, they may maintain your GIC in a registered account. You must pay tax on any interest you get if they keep it in a non-registered account.
  • Compound interest will increase your earnings the longer your money is locked in or, the longer the period (if your account compounds–not all GICs do).
  • A GIC account’s interest might be paid out monthly, once a year, or when the GIC matures.
  • You can withdraw your GIC if you have an emergency, but only under certain conditions (job loss, death in the family).

Best GICs in Canada conclusion

Guaranteed investment certificates offer an appealing rate of return when interest rates are rising. They can also be a good option for someone with a limited time frame for investing and a low-risk tolerance.

If you’re seeking a secure solution with a consistent rate of return, a guaranteed investment certificate (GIC) can help you reach your financial objectives.

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December 26, 2023
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FAQs about the best GICs in Canada

Is a GIC a good investment?

For people who are risk conservative, okay with a modest return, and saving for a short-term aim with an investment horizon of fewer than five years, GIC is a good option. It is not suitable for individuals who want to increase their investments more and are at ease with the risk involved.

Are GICs worth it?

GICs have a position in your financial planning. When you want to save money for a specific purpose, such as a wedding, GICs are a good option. They provide a low-risk setting where you can keep your money while also collecting interest. You can select the best alternative for your needs because financial institutions provide a range of term lengths.

How long should I lock my GICs?

Like with any investment, your choices should be based on your objectives. Select a short-term GIC, or a high-interest savings account if you need access to your money fast. GIC durations ranging from one to ten years are available if you plan to invest long-term and don't mind devoting your money to several years.

How do I purchase a GIC?

You can open a guaranteed investment certificate and compare the interest rates offered by various financial institutions. Then, start an account by clicking the "Get this Rate" button once you've discovered the best GIC rate for the particular account type and term you're looking for. You can also open a GIC online, over the phone, through a GIC Broker, or in person at a bank or credit union branch.

What is the risk of GICs?

GICs risk is low, the same as the money in your savings accounts. Since they guarantee you to receive your investment back, they are at low risk. If you buy a GIC from a bank or credit union, it is insured, so even if the bank fails, you will still get your money back.

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