GICs: Guaranteed Interest for a Set Term

A Guaranteed Investment Certificate (GIC) is a deposit with a financial institution for a set term. The contract states how interest is calculated and when it is paid. With a standard GIC held to maturity, the issuer promises to return the principal and pay the agreed interest, subject to the institution meeting its obligations.

Eligible deposits at CDIC member institutions are insured up to $100,000 per category, per member institution. Coverage has detailed ownership and product rules, and credit unions may use provincial deposit-insurance systems instead. Check the insurer and coverage limit for your institution and account.

• A standard GIC held to maturity does not fluctuate with the market, but access, issuer, coverage, and inflation risks still matter
• The interest rate is typically fixed and known upfront when you purchase the GIC
• Terms range from 30 days to 10 years, with 1–5 year terms being most common
• CDIC insurance covers up to $100,000 per eligible category at each member institution
• GICs can be held inside registered accounts (TFSA, RRSP, FHSA, RESP) or non-registered accounts
• Unlike a savings account, most GICs lock your money for the full term — you can't access it early without a penalty (unless it's a cashable GIC)

Not all GICs are created equal. The main differences come down to whether you can access your money early, whether the rate is fixed, and how long your money is locked up.

Rates change frequently and depend on the institution, term, deposit amount, and product features. Compare current offers for the same term and account type, then check the full contract before investing.

• Compare offers from more than one bank, credit union, or brokerage; no provider is always the highest-rate option
• Choose a term that matches when you expect to need the money, not a forecast about where interest rates will go
• For a non-registered account, include the tax treatment of interest in your comparison
• For a registered account, confirm that the account provider offers the GIC and that the deposit insurance applies to your ownership category

GIC laddering is a simple strategy that solves the biggest drawback of GICs: liquidity. Instead of locking all your money into a single long-term GIC, you spread it across multiple GICs with staggered maturity dates. This gives you regular access to a portion of your money while still earning higher long-term rates.

How to Build a GIC Ladder

1. 1Divide your total savings into equal portions (for example, 5 portions for a 5-year ladder)
2. 2Buy a GIC for each portion with staggered terms: 1-year, 2-year, 3-year, 4-year, and 5-year
3. 3When the 1-year GIC matures, compare current offers and decide whether to reinvest for another term
4. 4Each year, one GIC matures — giving you annual access to a portion of your money
5. 5After the initial build-up, one GIC matures each year, giving you a regular decision point for reinvesting or using the money

Example: You have $25,000 to invest. Instead of putting it all in a 5-year GIC, you buy five GICs of $5,000 each — 1-year, 2-year, 3-year, 4-year, and 5-year. Every year, one matures. You reinvest the matured GIC into a new 5-year term. After 5 years, you have five 5-year GICs staggered so one matures every 12 months.

• Provides regular liquidity — one GIC matures every year so you're never fully locked in
• Reduces interest rate risk — if rates rise, you reinvest maturing GICs at the new higher rate
• Captures higher long-term rates — eventually all your GICs earn the 5-year rate
• Works well for emergency funds, down payment savings, or retirees who need predictable income

GICs are not a one-size-fits-all investment. They excel in specific situations and fall short in others. The key is matching the right tool to the right goal.

GICs Are a Good Fit For

GICs Are NOT the Best Choice For

• Long-term wealth building (10+ year horizon) — stocks and equity ETFs have historically returned far more
• Beating inflation over long periods — after tax, GIC returns often barely keep up with inflation
• TFSA investing when you're young — you're wasting the most powerful feature (tax-free growth on higher returns) by holding low-return GICs
• Maximizing retirement savings — a diversified ETF portfolio will almost certainly outperform GICs over 20–30 years

You can buy GICs from almost any Canadian financial institution, but rates vary dramatically. Here's where to look:

• Banks and credit unions — compare current rates, eligibility, minimum deposits, and early-access terms
• GIC brokers and deposit brokers — they shop multiple issuers on your behalf and can sometimes find rates not available directly to consumers
• Online brokerages (Questrade, Wealthsimple) — offer GICs from multiple issuers within your investment account, making it easy to buy GICs alongside ETFs in your TFSA or RRSP

Rates and product availability change. Compare offers directly with several institutions, and verify the deposit insurer, rate, term, minimum deposit, and cashability before purchasing.

Official Government Resources