GICs come in two main types: cashable and non-redeemable. The right choice depends on how certain you are that you will not need the money before the term ends.
Cashable vs non-redeemable GIC comparison
| Feature | Cashable GIC | Non-Redeemable GIC |
|---|---|---|
| Early withdrawal | Yes (after lock-in period) | No |
| Interest rate | Lower (3.00%–3.50% typical) | Higher (3.80%–4.25% typical) |
| Lock-in period | Usually 30–90 days | Full term |
| Penalty for early withdrawal | Reduced interest rate | Not permitted |
| Available terms | Typically 1 year | 1–5 years |
| Best for | Uncertain timelines | Money you can lock away |
| CDIC insured | Yes | Yes |
How cashable GICs work
A cashable GIC lets you withdraw your principal before the maturity date. Most have a short initial lock-in period (30 to 90 days) during which you cannot access the money. After that period, you can cash out at any time, but you will typically receive a reduced interest rate on the withdrawn amount.
For example, a 1-year cashable GIC might pay 3.25% if held to maturity. If you cash out after 6 months, you might receive only 1.50% — or whatever the bank’s reduced early-withdrawal rate is.
How non-redeemable GICs work
A non-redeemable GIC locks your money in for the entire term with no option to withdraw early. In exchange for giving up flexibility, you earn a higher interest rate. These GICs are available in terms from 1 to 5 years.
If you need the money before maturity, you are generally out of luck. Some banks may allow early withdrawal under extreme circumstances (such as financial hardship), but this is at their discretion and you will likely lose most or all accumulated interest.
Rate comparison example
On a $10,000 GIC with a 1-year term:
| GIC Type | Rate | Interest Earned |
|---|---|---|
| Cashable | 3.25% | $325 |
| Non-redeemable | 4.00% | $400 |
| Difference | 0.75% | $75 |
The difference is $75 on $10,000 — not insignificant, but the real cost of cashability is modest for the flexibility it provides.
When to choose each type
Choose a cashable GIC when:
- You might need the money within the next year
- You are parking funds while deciding on a larger purchase
- You want a better rate than a savings account but need some flexibility
- Interest rates are rising and you may want to reinvest at a higher rate soon
Choose a non-redeemable GIC when:
- You are certain you will not need the money before maturity
- You want the highest guaranteed rate available
- You are building a GIC ladder with staggered maturity dates
- The money is earmarked for a specific future date (tuition, down payment, etc.)
Consider a HISA as an alternative
If you need full flexibility and daily access, a high-interest savings account may be a better choice than a cashable GIC. HISA rates are competitive with cashable GIC rates, and you can withdraw your money at any time with no restrictions or penalties.
Use our GIC calculator to compare the returns on different GIC options.