GIC Fundamentals

GIC stands for Guaranteed Investment Certificate, and it refers to an investment issued by a bank, credit union, or trust company, also known as the “issuer”. This investment carries a guaranteed rate of return, and the principal itself is also guaranteed. Elsewhere, similar products are referred to as “Time Deposits” or “Term Deposits”. In the United States, these products are called “Certificates of Deposit”.

GICs offer a safe and predictable way to grow your savings. Your principal is protected, and you earn a guaranteed rate of return for the term of the investment. GICs issued by CDIC member institutions are insured up to $100,000 per depositor, per insured category. This makes them one of the safest investment options available in Canada, ideal for conservative investors or anyone looking to diversify their portfolio with a low-risk component.

No. There are no fees or commissions charged to you when purchasing a GIC through 123GIC. The rate you see is the rate you get. Our service is completely free for investors — we are compensated by the financial institutions in our network, so there is never a cost passed on to you.

Your return depends on the principal amount, the interest rate, and the term of the GIC. For a simple interest GIC, multiply your principal by the annual rate and the number of years. For example, a $10,000 GIC at 4.50% for 1 year would earn $450 in interest. Compound GICs calculate interest on previously earned interest as well, resulting in slightly higher returns over multi-year terms. Our advisors can help you understand the exact return for any GIC you are considering.

Most GICs are locked in for the full term, meaning you cannot access your money before the maturity date without penalty. If early redemption is permitted, you may receive a reduced interest rate or forfeit some of the interest earned. Cashable or redeemable GICs offer more flexibility, allowing you to withdraw your funds after a short initial period (often 30 to 90 days) without penalty, though they may offer a slightly lower rate than non-redeemable GICs.

GIC rates are influenced by several factors, including the Bank of Canada's overnight rate, the issuer's funding needs, competition among financial institutions, and broader economic conditions. When the central bank raises interest rates, GIC rates tend to rise as well. Smaller institutions such as credit unions and trust companies often offer higher rates than the big banks because they rely more heavily on GIC deposits as a source of funding. That's why comparing rates across multiple issuers — as 123GIC allows you to do — is so important.