10 Best GIC Rates in Canada (2024): Earn High-Interest

Want to earn a high-interest rate without any risk? Guaranteed investment certificates (GICs) could be a good option for you as one of the most secure ways to earn interest income.

Here are some of the best GIC rates in Canada (updated January 03, 2024):

Bank Name1-Year GIC2-Year GIC3-Year GIC4-Year GIC5-Year GIC
EQ Bank5.10%4.70%4.45%4.30%4.25%
Simplii Financial4.90%4.15%4.00%4.00%4.00%
Tangerine Bank5.00%4.20%4.10%3.90%3.85%
Motive Financial5.40%5.15%4.80%4.65%4.60%
Peoples Trust*5.65%5.45%5.10%4.65%4.50%
Oaken Financial5.40%5.20%5.00%4.90%4.85%
Hubert Financial5.75%5.75%5.25%5.05%5.05%
Meridian Credit Union5.00%4.55%4.40%4.30%4.15%
ICICI Bank5.00%5.00%4.50%4.50%4.50%
Canadian Tire Bank4.90%4.50%4.40%4.30%4.16%

What Is a GIC?

GIC is a safe and secure investment that involves basically no risk. GICs generally offer better interest rates than savings accounts; however, with a tradeoff – you usually have to lock in your money for a specified period.

During this maturity period, you can’t cash in your deposits as you can with a savings account. However, banks and credit unions have introduced some flexibility for investors by branching out GIC into several types.

Types of GICs

You can classify GICs mainly into four categories:

  1. Traditional GIC: A fixed-rate non-redeemable investment. Here, you get a fixed interest rate on your investment that is locked in for a specified period.
  2. Redeemable (Cashable) GIC: Works pretty similarly to a savings account. Here, you can withdraw your savings before maturity. The interest rates offered at redeemable GICs are lower than non-redeemable ones.
  3. Variable-Rate GIC: The interest rate will change as overall borrowing rates go up or down. They’re great during rising interest rate environments but not so good when they’re going down.
  4. A Market-Linked GIC: Its interest rate changes with the underlying stock or equity. This type of GIC is ideal when the market is on a bullish streak but not great during a recession.

Investing in GICs

How to Invest in GICs

Investing in GICs is easy. You can buy GICs directly from your financial institution or through a broker. To invest in a GIC, you’ll need to deposit a minimum amount of money for a fixed term. The term can range from a few months to several years, and the longer the term, the higher the interest rate.

When you invest in a GIC, you’re essentially entering into a contract with the financial institution. The contract specifies the term of the investment, the interest rate, and the penalties for withdrawing your money before the term is up.

Choosing the Right GIC

When choosing a GIC, there are a few things to consider. First, consider the term of the investment. If you need access to your money in the short term, a shorter-term GIC may be a better option. If you’re looking for a long-term investment, a longer-term GIC may provide a higher rate of return.

Next, consider the interest rate. Different financial institutions offer different rates, so it’s important to shop around to find the best rate.

Finally, consider the penalties for early withdrawal. If you think you may need access to your money before the term is up, look for a GIC with lower penalties for early withdrawal.

Factors Influencing GIC Rates

GIC rates in Canada are influenced by several factors, including the Bank of Canada’s interest rate, inflation, and the length of the GIC term.

The Bank of Canada’s interest rate is the primary factor that affects GIC rates. When the Bank of Canada raises its interest rate, GIC rates also increase. On the other hand, when the Bank of Canada lowers its interest rate, GIC rates decrease.

Inflation is another factor that can affect GIC rates. When inflation is high, the purchasing power of your money decreases. As a result, GIC rates may be higher to compensate for the loss of purchasing power.

The length of the GIC term also affects the rate of return. Generally, longer-term GICs offer higher rates of return than shorter-term GICs. However, longer-term GICs also come with a higher risk of interest rate fluctuations.

Do You Even Need a GIC?

I personally never bought GICs in the past, as interest rates were way too low. But the interest rates offered have been excellent lately, so I’ve bought some GICs recently.

But beware, anytime you tie your money up for a certain amount of time, your financial freedom is restricted. A good alternative to a GIC is to use a high-interest savings account (HISA).

For example, EQ Bank has HISA rates, and you get much more freedom with your money. The everyday savings rate is 2.50%, so it might not be worth it to get a locked-in GIC if you need the flexibility.

However, if you don’t need the flexibility, then a GIC is an excellent option. For example, the 1-year GIC rate for EQ Bank is 5.50%.

You can sign up for an EQ Bank savings account here and get a EQ Bank GIC here.

Big Banks and GICs

If you prefer to stick with a big bank, there are still some options for GICs, but the rates will usually be much lower. As an example, Scotiabank is one of the largest banks in Canada and offers a variety of GIC options. Their 1-year non-redeemable GIC has a rate of 1.50%, which is much lower than other online banks.

Overview of Online GIC Banks

Simplii GIC Rates

Simplii Financial is the online banking division of CIBC. It was founded in 2017 and now offers a host of financial services.

Besides investments, you can also use Simplii Financial for a mortgage and other borrowing services. You can have a GIC locked in with Simplii for as low as $100 of principal.

EQ Bank GIC Rates

EQ Bank is one of the most popular online banks in Canada. The EQ Bank GIC rates are quite remarkable.

Get a GIC at EQ Bank here.

Tangerine GIC Rates

Tangerine is a direct bank that has been around since 1997. In 2012, Scotiabank made a successful acquisition of Tangerine. Today, Tangerine is one of the biggest online banks in Canada. The bank offers competitive GIC rates without any hidden service fees.

Motive Financial GIC Rates

Motive Financial is a virtual division of the Canadian Western Bank. The bank offers savings, registered accounts, and GICs at rates that are different than that of CWB.

Motusbank GIC Rates

Motusbank is a relatively new name in the online banking sector. However, it stands on the credibility of Meridian, which serves more than 300,000 members.

Peoples Trust GIC Rates

Peoples Trust is a CIDC-insured trust company based in Vancouver. It is primarily known for its mortgage servicing. It also offers credit cards and high-interest investment options.

Oaken GIC Rates

Oaken Financial is an online bank under Home Bank and Home Trust Company, one of Canada’s largest trust entities. Oaken Financial offers reasonable rates on its long-term non-redeemable GICs. You need to at least lock in $1,000 to have GIC with Oaken Financial.

Hubert Financial GIC Rates

Hubert Financial is an online bank offering deposit services, mortgages, and credit cards. It also offers better GIC rates than big banks.

ICICI Bank Canada GIC Rates

ICICI is an Indian multinational financial and banking service that also operates in Canada and serves a large chunk of the local population.

Canadian Tire GIC Rates

Canadian Tire, the mega-chain retailer, really does sell everything. Yes, even Canadian Tire offers GICs. You can check out their rates here.

GICs and Retirement

When it comes to retirement planning, GICs can be a useful tool to help grow your savings in a low-risk investment.

GICs in RRSPs

GICs can be held in a Registered Retirement Savings Plan (RRSP) as part of a diversified investment portfolio. They offer a fixed rate of return over a set period of time, which can help you plan for your retirement. Keep in mind that GICs in an RRSP are subject to the same contribution limits and withdrawal rules as other investments in your RRSP.

GICs in TFSAs

GICs can also be held in a Tax-Free Savings Account (TFSA), which allows your savings to grow tax-free. This can be a great option for those who have already maxed out their RRSP contributions or for those who want to save for retirement while minimizing their tax liability.

GICs in RRIFs

If you’re over the age of 71, you’re required to convert your RRSP into a Registered Retirement Income Fund (RRIF). GICs can be held in a RRIF as a low-risk investment option that provides a guaranteed rate of return. Keep in mind that you’ll be required to withdraw a minimum amount from your RRIF each year, so make sure to factor this into your retirement planning.

GICs and Insurance

It’s important to understand the insurance coverage that protects your investment. In Canada, there are two types of insurance that can cover your GICs: CDIC insurance and deposit insurance.

CDIC Insurance

The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation that provides insurance coverage for eligible deposits. CDIC insurance covers GICs issued by CDIC member institutions, up to a maximum of $100,000 per depositor, per insured category.

It’s important to note that not all GICs are eligible for CDIC insurance. Only GICs issued by CDIC member institutions are covered. You can check if your financial institution is a CDIC member by visiting the CDIC website.

Deposit Insurance

Deposit insurance is provided by provincial or territorial governments and covers deposits held at credit unions. Deposit insurance coverage varies by province and territory.

In some provinces and territories, deposit insurance covers GICs up to a certain amount, while in others, deposit insurance covers all deposits, including GICs.

GICs and Loans

If you’re planning on taking out a loan for a big purchase like a home or a car, it’s important to consider how your GICs may affect your loan options.

One thing to keep in mind is that many lenders will allow you to use your GICs as collateral for a loan. This means that you can use the value of your GICs to secure a loan, which can help you get a lower interest rate and better terms.

Another option is to use your GICs to help fund a down payment on a home. This can help you qualify for a larger loan and get better terms since you’ll be putting more money down upfront.

However, it’s important to remember that using your GICs as collateral or for a down payment means that you won’t have access to that money until the loan is paid off or the GICs mature. This can be a drawback if you need access to your funds in the short term.

How to Get the Best GIC Rates?

GICs offer better interest rates than savings accounts. However, you can also pick the best among betters by choosing the GICs issued by an online bank or a credit union.

Online banks can offer higher GIC rates because they are saving a lot in overhead expenses.

Conclusion

As you can see, online banks offer a much better interest rate than most of the big traditional banks. 

Be careful with GICs, as you are locking in your money for the length of the term. 

If you need the flexibility of being able to withdraw your money at any time, a high-interest savings account might be better for you.

Check out my list of the best high-interest savings accounts in Canada.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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