Guaranteed Investment Certificates (GICs) are popular in Canada due to their low-risk nature and guaranteed returns.
Although the return on GICs is typically lower than other investment options like stocks or mutual funds, many Canadians opt for them as a secure way to grow their savings.
This article explores the best GIC rates in Canada as of today, and highlights the benefits of GICs, how to compare them, and what to consider before investing.
What Is a GIC?
A Guaranteed Investment Certificate (GIC) is a secure investment that offers a guaranteed rate of return over a fixed term. When you invest in a GIC, you agree to lock away your money for a specific period, usually ranging from 1 to 5 years. In return, the financial institution pays you interest at a rate that is typically higher than a regular savings account.
Benefits of GICs
Here are the key advantages of investing in GICs:
- Guaranteed Return: Your principal investment and interest earnings are guaranteed.
- Low Risk: GICs are among the safest investment options.
- Portfolio Diversification: GICs provide stability to an investment portfolio, especially during economic uncertainty.
- Flexible Terms: GICs offer both short-term and long-term options, typically from 1 year to 5 years.
- Laddering Strategy: Investors can stagger GICs with varying maturities to optimize their returns and ensure access to funds at regular intervals.
Best GIC Rates in Canada as of Today
GIC rates vary by term and financial institution. Here are some of the best GIC rates currently available in Canada:
| Bank/Institution | Term | Rate (Annual) | Minimum Deposit |
|---|---|---|---|
| Home Trust Company | 1 Year | 5.65% | $1,000 |
| Home Trust Company | 3 Year | 5.45% | $1,000 |
| Tangerine | 1 Year | 5.70% | No minimum deposit |
| Tangerine | 1.5 Year | 5.75% | No minimum deposit |
| Oaken Financial | 1 Year | 5.75% | $1,000 |
| WealthONE Bank of Canada | 1 Year | 5.98% | $1,000 |
| WealthONE Bank of Canada | 3 Year | 5.48% | $1,000 |
| EQ Bank | 1 Year | 5.65% | No minimum deposit |
| Peoples Bank | 1 Year | 5.80% | No minimum deposit |
| Motive Financial | 1 Year | 5.75% | No minimum deposit |
| Motive Financial | 3 Year | 5.48% | No minimum deposit |
| Haventree Bank | 3 Year | 5.36% | $5,000 |
| Haventree Bank | 5 Year | 5.01% | $5,000 |
| LBC Digital | 3 Year | 5.35% | $100 |
| Laurentian Bank | 3 Year | 5.35% | $500 |
Types of GICs
There are several types of GICs to choose from, depending on your financial goals:
- Fixed-Rate GICs: Offer a fixed interest rate for the entire term.
- Escalator GICs: Interest rates increase over the term, providing higher returns the longer you invest.
- Market-Linked GICs: Returns are tied to the performance of a stock index or market, offering potential higher returns but no guaranteed interest rate.
- Variable-Rate GICs: Interest rates fluctuate based on market conditions, providing flexibility in uncertain economic times.
How to Compare GIC Rates
To find the best GIC for your needs, consider the following:
- Interest Rates: Compare the annual interest rates offered by different banks. Higher rates mean better returns.
- Term Length: Select a term that suits your financial situation. Long-term GICs generally offer higher rates, but short-term GICs provide quicker access to funds.
- Minimum Deposit: Check the minimum deposit requirements. Some institutions may require as little as $100, while others may ask for $5,000 or more.
- Withdrawal Flexibility: Some GICs are redeemable, allowing you to withdraw funds before the maturity date (with penalties), while others are non-redeemable and require you to keep your money locked in until the term ends.
- Compounding Frequency: Look at how often interest compounds (monthly, semi-annually, or annually) as this can affect the total returns.
Who Has the Best GIC Rates in Canada Today?
Based on the most recent data, some of the best GIC rates available in Canada include:
- WealthONE Bank of Canada offers a 5.98% annual interest rate for a 1-year GIC, making it one of the highest available.
- Oaken Financial and Tangerine are offering competitive rates around 5.75% for 1-year terms, with Tangerine’s flexibility on deposits.
- Peoples Bank also provides a strong 5.80% rate for a 1-year term, which is slightly higher than most competitors.
These institutions provide top-tier GIC rates, but you should always check current rates, as they can change frequently.
How the Best GIC Rates Affect Your Investment
Choosing the GIC with the highest interest rate can maximize your investment returns, but there are other factors to consider. For example:
- Long-Term Investments: If you invest in a 5-year GIC with a higher interest rate, you lock in that rate for a long time, which can be beneficial if interest rates drop in the future.
- Laddering Strategy: By splitting your investment into multiple GICs with different terms, you can access your money at regular intervals while still benefiting from higher rates on long-term GICs.
If you’re looking for a safe and guaranteed return on your investment, GICs are an excellent option. Currently, WealthONE Bank of Canada, Oaken Financial, and Tangerine are offering some of the best GIC rates in Canada. Before making a decision, consider your financial needs, the term length, withdrawal options, and interest rates to ensure you choose the best GIC for your situation.
