You can buy Guaranteed Investment Certificates (GICs) from banks, credit unions, and other financial institutions and hold them in either registered or non-registered accounts. GICs are low-risk investments that give you a guaranteed return in exchange for locking away your money for a set period of time, usually 1 to 10 years.
There are often minimum deposit amounts, and the best GIC rates and terms change often.
GICs are favoured by cautious, new, and long-term investors looking to maximize returns while minimizing risk.
Key Takeaways
- A Guaranteed Investment Certificate (GIC) is a secure investment vehicle where you earn interest on funds you commit for a predetermined term, with limited access to your money during that period.
- GICs can be bought through digital platforms or in person at most major banks in Canada.
- GICs can be held in registered accounts (like RRSP or TFSA) for potential tax advantages.
What you need to know about GICs before you invest
A GIC is a Guaranteed Investment Certificate. You purchase it from a financial institution at a set term and interest rate, and when the term is up you earn back your initial investment plus interest.
People tend to use GICs for long-term investments, such as GIC laddering for retirement or other long-term savings projects. GICs are a low-risk low-return approach that appeals to cautious and new investors.
Here are a few terms and facts you should know about GICs:
- Fixed terms: GICs are locked in for a set period, ranging from 30 days to 10 years. Your initial investment plus interest is returned at the end of this term.
- Locked money: During the GIC term, your money is not available for withdrawal. For most GICs, your funds are locked up until the maturity date (unless you choose a redeemable GIC option).
- Minimum investment: Many institutions have a minimum purchase amount for GICs, often starting at $100.
- Interest rates: GIC rates can be either fixed or variable. Fixed rates provide a set return, while variable rates may fluctuate over time.
- Guaranteed returns: GICs offer guaranteed returns and most are insured by the Canada Deposit Insurance Corporation (CDIC) or provincial insurers (for credit unions). This insurance protects your investment if the financial institution goes bankrupt.
- Redemption: Generally, GICs are non-redeemable before their maturity date. Withdrawing funds early may result in penalties or a loss of interest. However, redeemable or cashable GICs allow early withdrawal without penalties.
- Account types: GICs can be held in both registered and non-registered accounts, such as RRSPs, FHSAs, and TFSAs. Interest earned on GICs is subject to income tax unless held in a registered account.
- Tax implications: Interest earned on GICs is subject to income tax in Canada, unless it's in a registered account. If you're unsure about the tax implications of buying a GIC, consider consulting a tax professional.
- Proof of purchase: You'll receive a proof of purchase from the GIC's issuing institution, either digitally or by mail. This document contains important details like the GIC certificate number.
- Document security: Keep your GIC documentation in a safe but accessible location. You'll need it for actions like canceling an automatic renewal, adjusting the maturity date, or cashing in your GIC early.
GIC issuers
You can buy a GIC from the big 6 banks, a trust company, or a credit union in Canada.
Canadian banks
Major banks issue GICs with various term rates, like RBC, TD, and Scotiabank. However, larger institutions do not always offer the best rates. You may find better GIC rates with smaller, digital banks like Simplii and EQ Bank.
Trust companies
Trust companies like Sun Life Financial also issue GICs. These are sometimes called "trust GICs," but it’s the same investment. Trust companies are federally regulated.
Credit unions
Credit unions do sell GICs, but their insurance may come from a provincial body rather than CDIC. Only provincially and federally regulated credit unions and caisses populaires offer insured deposits.
How to buy GICs: Distribution channels
Buying GICs in Canada involves opening an account at the financial institution, transferring money, and purchasing your chosen GIC.
Here are the steps to buy a GIC at different institutions in Canada:
Online discount brokerages
Since they’re fully online, you can buy a GIC at online brokerages relatively quickly. Each brokerage has its own process, but the steps are pretty similar:
- Open a bank account
- Fund the account by depositing an amount equal to the GIC you want to buy
- Compare the options for GIC issuers
- Purchase your GIC
Do your research, as not all online brokerages are reputable, some have high minimum purchase amounts compared to banks, and some charge commissions.
Online or digital banks often provide the best GIC interest rates in Canada.
Independent deposit brokers
You can work with an independent professional to find and purchase a GIC. A deposit broker specializes in guaranteed financial investments.
- Vet the broker carefully – we recommend you use someone who is listed in a professional, regulated association
- Inform them of the types of GICs and details you’re interested in (term, amount, etc.)
- Fill out forms, share your ID, and other required information
- Send your deposit cheque
- Review the receipt and proof of purchase from the institution via the broker
Banks and trust companies
You must have an account with the bank or trust company before you can purchase a GIC.
To open a new bank account, you'll need 1-2 forms of identification, contact information, and proof of income (like a paystub).
- Deposit the amount equal to the GIC you want to purchase
- Log into your account online or contact the bank by phone
- Purchase the GIC, providing your account number and SIN
Some institutions require you to visit in person to purchase a GIC – bring your ID, SIN, and account number.
Major banks have strong reputations and lots of physical branches, which many investors prefer. However, the purchase process and interest rates may not be as favorable compared to other institutions.
Credit unions and caisses populaires
Start by opening an account at the institution if you don’t already have one. This usually involves paying a one-time membership fee around $25 – something banks don’t require.
- Fund your account with the amount you’d like to spend on a GIC
- Log into your online account or call your credit union on the phone
- Purchase a GIC
Remember to confirm that the credit union is provincially and/or federally regulated so your GIC is insured.
Are there fees to buy GICs?
There is usually no fee to buy a GIC in Canada. However, you may have to pay a commission if you buy through a broker or a financial advisor.
How to buy GIC in Questrade
You can buy GICs directly from your online Questrade account.
If you have Questrade Edge Web installed, you’ll choose "Fixed Income" from the menu bar. If not, go to Investment Products and then “Fixed Income.”
- Log into your Questrade account
- Go to the "Fixed income" platform
- Review your GIC options in the trading platform.
- Select a GIC and choose "Buy"
- Select the account you’ll use to fund the purchase
- Finalize and then look for the purchase confirmation
You can browse anytime, but GICs are only available for purchase on Questrade from 9 am ET - 1 pm ET (excluding weekends and holidays).
That’s it – now you simply wait out the term of your GIC and enjoy the payout.
Questrade is one of Canada's top online investment platforms. With very low fees, including no-fee ETF trading, commission-free stock trades, and plenty of investment types, Questrade just about covers it all.
- Total transparency with fees
- Surprisingly low fees
- Lots of investment account and product choices
- Plenty of convenient methods for support
- Limited amount of time to report fraud for full reimbursement
$25 GeniusCash + $50 bonus for funding a new account, and $0 commissions on stocks & ETFs- Excellent array of investing and trading tools
- Trade ETFs for $0
- Commission-free stock trades
- TFSA
- RRSP
- Spousal RRSP
- LIRA
- Locked-In RRSP
- RIF
- LIF
- RESP
- Family RESP
- Corporate
- Investment Club
- Partnership
- Sole Propietorship
- Individual Informal Trust
- Joint Informal Trust
- Formal Trust
- Individual Margin
- Joint Margin
- Individual Forex & CFDs
- Joint Forex & CFDs
- FHSA
- Stocks
- ETFs
- Options
- FX
- IPOs
- CFDs
- Mutual Funds
- Bonds
- GICs
- International Equities
- Precious Metals
$25 GeniusCash + $50 bonus for funding a new account, and $0 commissions on stocks & ETFsHow to buy a GIC in RBC Direct Investing
Log into your RBC account and make sure you have enough funds to purchase a GIC. You can purchase online if you have a self-directed account – otherwise, you may have to visit a branch in person to buy a GIC.
- Open the RBC Direct Investing site
- Select "Trade and Transfer" and then “Place an Order”
- Navigate to the fixed income search feature
- Review GIC options, terms, and rates
- Decide which account you’ll hold the GIC in (TFSA, RRSP, etc)
- Complete the purchase and save your confirmation
At RBC, the minimum purchase is $3,500. All GIC purchases via RBC Direct Investing must be completed before 2:15 pm ET, otherwise it won't process until the next business day.
$75 GeniusCash + Unlimited transactions for $0 + Ding-free non-affiliated ATM usage.
$25 GeniusCash + $50 bonus for funding a new account, and $0 commissions on stocks & ETFs
$12 GeniusCash + Access trusted news coverage 24/7 + Digital and home subscription options.
$25 GeniusCash + Delicious meal choices with fresh ingredients + Front-door delivery.How to buy a GIC in TD Direct Investing
Log into your TD Direct Investing account. Make sure you have enough money in your other TD accounts to purchase your intended GIC.
- Log into WebBroker
- Select "Trading" from the top menu
- Under "Buy/Sell," choose the GIC you want to purchase
- Choose "Previous Order"
- Finalize the transaction
The minimum amount for a GIC at TD is $500 for a registered account. TD also offers cashable GICs. You can make a GIC purchase order at TD between the hours of 9 am and 4 pm ET, excluding holidays and weekends.
FAQ
How do I buy GIC in my TFSA?
This varies by bank. In most cases, you log into your institution, navigate to the broker section, and look for a Buy/Sell or Fixed Income option. Once purchased GIC, you can choose to hold GICs in your TFSA account.
Is it a good time to buy a GIC in Canada?
Generally, purchasing GICs when Canada’s overnight rate is higher than usual is recommended. More rate cuts are predicted for 2024, so now could be a good time to lock in a longer term and better rate.
What are the disadvantages of GIC?
GICs are low risk, low-return investments so the major disadvantage is low return. It’s also inconvenient that your money is completely locked up and unavailable for the term of your GIC (unless you get a redeemable or cashable GIC).
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