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GIC Guide Canada: How GICs Work, Types and Where to Buy

Updated

A Guaranteed Investment Certificate (GIC) is a fixed-term deposit. You hand a bank, trust company or credit union a set amount for a set term, and it promises to return that amount plus interest at a rate fixed on the day you buy. This guide covers how a GIC works, the main types, where to buy one and how GICs fit alongside other savings. Each topic that has its own page in the GIC hub is summarised here with a link.

The trade is simple: a known return in exchange for less access to your money. The risk with a standard GIC is not losing principal; it is locking in a rate that later looks low, or needing the money before the term ends.

How GICs work

FeatureHow it works
TermsCommonly 30 days to 5 years; some issuers sell longer terms
RateFixed at purchase for the whole term (market-linked and escalating-rate GICs are the exceptions)
Interest paymentAt maturity, or annually, semi-annually or monthly, depending on the product
PrincipalReturned in full at maturity on a standard GIC
Early accessNone on a non-redeemable GIC; allowed on a cashable or redeemable GIC, usually at a lower rate
Deposit insuranceCDIC covers eligible deposits at member institutions up to $100,000 per depositor per category; provincially regulated credit unions are covered by provincial insurers

Longer and less flexible terms usually pay more, because the institution can lend your money out for longer. That pattern is not guaranteed: when the yield curve is flat or inverted, a 1-year GIC can pay as much as a 5-year one. The GIC calculator turns any rate, term and compounding frequency into a maturity value.

How interest is paid matters in a non-registered account. For a GIC longer than a year, the interest earned in each year of the term has to be reported every year, even if it is only paid at maturity. The guide to how GIC interest is taxed explains the accrual rule and the T5 slip.

Types of GICs

TypeWhat changesDetail
Non-redeemableLocked until maturity; usually the highest fixed rateCashable vs non-redeemable GICs
Cashable or redeemableCan be cashed early, usually after 30 to 90 days, at a lower rateCashable vs non-redeemable GICs
Market-linkedInterest depends on a stock index; principal is returned, but interest can be as low as the guaranteed minimum (0% on some products)Market-linked GICs explained
Escalating-rateThe rate steps up each year of the termCompare the blended rate with a fixed GIC of the same term
Variable-rateThe rate moves with a benchmark such as primeLess common; the rate can fall as well as rise

“Term deposit” is an older label that some institutions still use for short fixed deposits. The term deposit vs GIC page covers what the two names mean. A corporation can buy GICs too; business GICs have their own insurance and tax rules.

GIC rates

Posted rates change with the Bank of Canada policy rate and with each institution’s need for deposits. The best GIC rates page lists 1-, 2- and 5-year rates at named banks and online institutions, each with the date it was checked, and the minimum deposit each one asks for. In the most recent check, the online banks and trust companies listed there posted higher rates than RBC’s posted rates at every term shown; big-bank special offers can narrow that gap.

Building a ladder

A GIC ladder splits a sum across several terms (for example, equal parts in 1- to 5-year GICs) and reinvests each part in a new long term as it matures. Part of the money comes due every year, and the ladder earns a blend of short and long rates. The GIC laddering guide walks through a full example.

GICs compared with other safe savings

  • A high-interest savings account pays a variable rate and lets you withdraw any day. A GIC fixes the rate but ties the money up. The GIC vs HISA comparison sets out which suits which kind of savings.
  • Bonds and bond ETFs can be sold any trading day, but their price falls when interest rates rise; a GIC held to maturity has no price risk. See GIC vs bonds.
  • Safety. Are GICs safe? covers CDIC categories, provincial credit union coverage and the risks a guarantee does not remove.

Which account to hold a GIC in

The GIC is the investment; the account decides the tax. In a TFSA the interest is tax-free; in an RRSP, RRIF or FHSA it is sheltered until withdrawal (and an FHSA withdrawal for a qualifying first home is tax-free); in a non-registered account it is taxed every year at your marginal rate. The GIC tax guide shows the after-tax difference, and the TFSA hub’s page on holding a GIC inside a TFSA covers that account in detail.

Where to buy GICs in Canada

WhereWhat to expect
Big Five banks (RBC, TD, BMO, Scotiabank, CIBC)Convenient if you already bank there; posted rates at longer terms are often below online banks, and branches sometimes offer “special” rates on request
Online banks and trust companies (for example EQ Bank, Oaken Financial, Peoples Trust, Tangerine)Often higher rates at 2- to 5-year terms; accounts are opened and managed online
Credit unionsRates vary widely; deposits at a provincially regulated credit union are insured by the provincial insurer, not CDIC (federally regulated credit unions are CDIC members)
Discount brokerages (brokered GICs)GICs from several issuers in one account, including TFSAs and RRSPs; the selection may not include every issuer’s best rate

Before buying, a few checks cover most of what goes wrong: whether the issuer is a CDIC member or a provincially insured credit union, whether the GIC is cashable or non-redeemable, how interest is paid, what happens at maturity (many GICs renew automatically at the posted rate), and which account it will sit in. Minimum deposits run from none to $1,000 at the institutions on the rates page.

All GIC articles

Sources

The figures and rules on this page come from these sources, last checked against them between September 15, 2026 and September 25, 2026. How we check facts.