If the stock market makes you nervous but a regular savings account feels like it’s barely paying you anything, there’s a middle option a lot of Canadians overlook: the GIC. It won’t make you rich, but it also won’t lose your money — and for the right goal, that trade-off is exactly what you want.
Here’s what a GIC actually is, how it works, and when it makes sense.
Short answer: A GIC is a fixed-term deposit that pays a guaranteed interest rate and returns your original money at maturity, with terms from 30 days to 10 years and longer terms usually paying more. Redeemable GICs let you access the money early at a lower rate; non-redeemable GICs lock it in for a higher rate. GICs are protected by CDIC or provincial deposit insurers, and the interest is fully taxable outside a registered account.Key points from this guide · last reviewed Sep 11, 2026
Current rates: we compare GIC rates from 11 Canadian banks and credit unions, checked weekly against each institution’s own rate page.
What Is a GIC?
In simple terms: A GIC (Guaranteed Investment Certificate) is like lending your money to a bank or credit union for a set period of time. In exchange, they guarantee you a fixed interest rate — and promise to give your original money back in full when the term ends.
Where the name comes from: “Guaranteed” means exactly that — unlike stocks or mutual funds, your GIC’s value doesn’t go up or down with the market. You know exactly how much you’ll have at the end of the term, down to the dollar.
Why Does a GIC Matter?
Because it fills a specific gap: it pays more than a typical chequing account, and it’s far more predictable than investing in stocks.
- Your rate is locked in. Once you buy a GIC, market ups and downs don’t affect what you earn.
- Your principal is protected. You get back at least what you put in (assuming you hold it to maturity).
- It’s a good fit for money you don’t need right away but don’t want to risk in the market either — think a house down payment in two years, or an emergency fund top-up.
In simple terms: A GIC trades away flexibility and big upside for safety and certainty.
How Does a GIC Work?
You pick an amount to deposit and a term length, and the institution tells you the rate you’ll earn.
- Terms typically range from 30 days to 10 years, though 1-year, 3-year, and 5-year terms are the most common.
- Minimum deposits are usually small — often between $100 and $1,000, depending on the bank or credit union.
- Longer terms generally pay higher rates — you’re rewarded for locking your money up longer.
Simple example: Say you put $5,000 into a 1-year GIC paying 3.6%. At the end of the year, you’d have your original $5,000 plus about $180 in interest — guaranteed, regardless of what happens in the stock market that year.
Quick Tip: On September 28, 2026, the highest posted rates in our weekly GIC rate table were 3.80% for a 1-year GIC, 4.20% for a 3-year GIC and 4.40% for a 5-year GIC, all at Oaken Financial. The Big Five banks’ posted 5-year rates ran from 2.75% to 3.55% on the same day. Rates change often and vary by institution, so always check current rates before committing.
Redeemable vs. Non-Redeemable GICs
Not all GICs lock your money up the same way. There are two main types.
| Type | Can You Access It Early? | Typical Rate |
|---|---|---|
| Redeemable (cashable) | Yes, usually with notice or a small penalty | Lower |
| Non-redeemable (locked-in) | No, funds are locked until maturity | Higher |
What this means for you: If there’s any chance you’ll need the money before the term ends, a redeemable GIC gives you flexibility — for a lower rate. If you’re confident you won’t touch it, a non-redeemable GIC usually pays more.
Is Your Money Safe in a GIC?
This is one of the big reasons people choose GICs in the first place.
- GICs at banks are insured by CDIC (Canada Deposit Insurance Corporation) for up to $100,000 per eligible category, per institution.
- GICs at credit unions are typically covered by a provincial deposit insurer instead of CDIC — and in some provinces, like Ontario, coverage can go as high as $250,000 or more, depending on the account type.
Quick Tip: Before buying a GIC, confirm which deposit insurance program covers your institution and what the coverage limit actually is — it varies by province and by whether you’re dealing with a bank or a credit union.
How Are GICs Taxed?
This depends entirely on where you hold the GIC.
- Inside a registered account (like a TFSA, RRSP, or FHSA), the interest you earn is tax-free or tax-deferred, just like any other investment held in that account.
- Outside a registered account, GIC interest is fully taxable as income in the year it’s earned or credited — even if you don’t touch the money.
What this means for you: If you have TFSA or RRSP room available, holding a GIC inside one of those accounts can meaningfully boost your after-tax return compared to holding it in a regular, non-registered account.
Is a GIC a Good Investment?
It depends on what you’re using it for. A GIC isn’t designed to beat the stock market — it’s designed to protect your money while still earning something.
- Good fit: short-to-medium-term savings goals, money you’ll need on a known date, a portion of a retirement portfolio you want to keep stable.
- Less of a fit: long-term growth goals where you have time to ride out market ups and downs, since GIC returns are unlikely to outpace stocks over long periods.
Risk to keep in mind: Inflation can erode the real value of a GIC’s fixed return — if inflation runs higher than your GIC rate, your money technically loses purchasing power even though the account balance goes up. GICs also aren’t guaranteed to beat other savings options like a high-interest savings account, so it’s worth comparing rates before locking in. If you’d rather not lock all of your money up for the same term, a GIC ladder spreads it across several terms so part of it comes due every year.
Key Takeaways
- A GIC is a fixed-term deposit that pays a guaranteed interest rate and returns your original money at maturity.
- Terms commonly range from 30 days to 10 years, with longer terms usually paying higher rates.
- Redeemable GICs let you access your money early for a lower rate; non-redeemable GICs lock your money in for a higher rate.
- GICs are protected by CDIC (banks) or provincial deposit insurers (credit unions), typically up to $100,000 or more depending on the institution and province.
- GIC interest is tax-free or tax-deferred inside registered accounts, and fully taxable outside of them.
- GICs work best for near-term savings goals, not long-term growth.
The Bottom Line: A GIC won’t make you rich, but that’s not the point. It’s a simple, low-risk way to earn a guaranteed return on money you don’t want to gamble with — especially useful for short-term goals or as the stable portion of a bigger financial plan.
Frequently Asked Questions About GICs
What is a GIC? A GIC (Guaranteed Investment Certificate) is a fixed-term deposit that pays a guaranteed interest rate and returns your original deposit when the term ends.
Are GICs safe? Yes. GICs at banks are covered by CDIC insurance up to $100,000 per category, and GICs at credit unions are typically covered by provincial deposit insurance, often with higher limits.
Can I take my money out of a GIC early? Only if you choose a redeemable (cashable) GIC, usually for a lower interest rate. Non-redeemable GICs lock your money in until maturity.
Are GICs taxed? GIC interest is taxable as income if held outside a registered account, but tax-free or tax-deferred if held inside a TFSA, RRSP, or FHSA.
Want to keep learning? Browse more beginner-friendly personal finance guides on MoneyMint, including our guide to what a HISA is.
This article is for general educational purposes and isn’t financial or tax advice. GIC rates, deposit insurance limits, and tax rules can change and vary by institution and province — always confirm current details with your financial institution, your provincial deposit insurer, or a qualified financial professional before making decisions.