Investing in a Guaranteed Investment Certificate (GIC) is a safe and reliable way to grow your savings with minimal risk. GICs are especially popular in Canada for those who prefer a guaranteed return without the volatility of stocks or mutual funds.
However, not all GICs are created equal, and rates can vary significantly between financial institutions.
In this article, we’ll explore some of the best GIC rates available in Canada as of today, and help you understand how to choose the best option for your investment needs.
Why Choose GICs?
GICs are attractive because they offer a guaranteed return on investment over a set period. This stability makes them a low-risk option, ideal for conservative investors or those looking to diversify their portfolios with a safe asset.
Although GICs typically offer lower returns compared to more volatile investments like stocks, they provide peace of mind with predictable earnings.
Comparing GIC Rates
GIC rates in Canada can vary depending on several factors, including the term length, the issuing institution, and whether the GIC is registered (like an RRSP or TFSA) or non-registered. Below are some of the top GIC rates available today:
| Institution | Term | Rate | Minimum Deposit |
|---|---|---|---|
| WealthONE Bank of Canada | 1 Year | 5.98% | $1,000 |
| Peoples Bank | 1 Year | 5.80% | $1,000 |
| Oaken Financial | 1 Year | 5.75% (Annual) | $1,000 |
| Tangerine | 1.5 Years | 5.75% | None |
| Home Trust Company | 1 Year | 5.65% (Annual) | $1,000 |
| EQ Bank | 1 Year | 5.65% (Non-reg) | None |
| Motive Financial | 1 Year | 5.75% (Non-reg) | None |
| Haventree Bank | 3 Years | 5.36% (Maturity) | $5,000 |
| Laurentian Bank | 3 Years | 5.35% | $500 |
As illustrated, WealthONE Bank of Canada offers the highest rate for a 1-year term at 5.98%. This is closely followed by Peoples Bank at 5.80% and Oaken Financial at 5.75%. These rates are annualized, meaning they reflect the interest you’ll earn over the course of one year.
Understanding the Terms
When comparing GIC rates, it’s crucial to understand the different terms and types of GICs:
- Fixed-Rate GICs: These offer a constant interest rate over the term, providing stable and predictable returns.
- Variable-Rate GICs: The interest rate can fluctuate based on market conditions, potentially leading to higher or lower returns.
- Market-Linked GICs: These are tied to the performance of a stock market index. While they offer higher potential returns, they also carry more risk.
- Non-Redeemable GICs: These lock your money in until the term ends, offering higher interest rates in exchange for less flexibility.
- Redeemable GICs: These allow you to withdraw your money before the end of the term, though usually with a penalty.
Choosing the Best GIC
Selecting the best GIC depends on your financial goals and needs. If you anticipate needing access to your funds before the term ends, a redeemable GIC might be better, despite its typically lower interest rates.
For those looking to maximize returns without needing early access, a non-redeemable GIC with a higher rate is ideal.
Some investors also use a strategy called “GIC laddering,” where they spread their investment across multiple GICs with different term lengths. This allows for more frequent access to cash while benefiting from potentially higher long-term rates.
Today’s Best Picks
If you’re looking for the best GIC rates today, here are some top picks:
- WealthONE Bank of Canada (1-Year Term): Best overall rate at 5.98%.
- Peoples Bank (1-Year Term): A solid choice at 5.80% with a low minimum deposit.
- Oaken Financial (1-Year Term): Offers 5.75% with a simple, straightforward investment process.
- Tangerine (1.5-Year Term): Excellent flexibility with a 5.75% rate and no minimum deposit.
These rates offer a mix of short-term and slightly longer-term options, providing both high returns and flexibility depending on your investment horizon.
Before investing, it’s important to double-check current rates as they can change frequently. Also, consider any fees, penalties for early withdrawal, and the financial stability of the institution offering the GIC.
When you choose the right GIC, it can be a safe and effective way to grow your savings with the confidence of guaranteed returns.
FAQs
What is the highest GIC rate in Canada today?
WealthONE Bank of Canada offers the highest rate at 5.98% for a 1-year term.
Can I withdraw my GIC before maturity?
Yes, but it depends on the type. Redeemable GICs allow early withdrawal, often with penalties.
Are GICs safe to invest in?
Yes, GICs are low-risk investments, as your principal and interest are guaranteed.
Do all GICs require a minimum deposit?
Most do, but some, like those from Tangerine, do not require a minimum deposit.
What is GIC laddering?
GIC laddering is a strategy where investments are spread across multiple GICs with varying terms for better cash flow and returns.
