Guaranteed investment certificates (GICs) provide a low-risk way to grow your savings with the assurance that your principal will be returned along with earned interest. GICs typically pay higher interest than regular savings accounts, a gap that has widened since the Bank of Canada’s recent rate increases. While GIC returns usually trail long-term stock market gains, they eliminate volatility and protect your capital—making them a reliable choice for preserving and growing funds for specific goals.
GICs are particularly attractive right now for Canadians who want a safe place to park money for short- to medium-term objectives. Choosing the right GIC depends on your timeline, liquidity needs and tax situation. Below is a clear guide to help you select the best GIC for your needs and practical steps to purchase one at Scotiabank.
Which GIC is right for you?
A GIC functions like a loan to a financial institution: you deposit funds and the institution repays that amount plus interest at a predetermined maturity date. Typically, longer terms offer higher interest rates, so the first decision is the term length that matches your savings horizon. Common GIC terms range from 30 days up to 10 years, with one- to five-year terms being especially common.
You should also decide how accessible you want your money to be. Redeemable (cashable) GICs allow withdrawals before maturity—usually with minimal or no penalty—so they’re suited to savers who want flexibility. Non-redeemable GICs lock funds until maturity and generally offer higher interest rates as compensation for reduced liquidity.
Most GICs pay a fixed interest rate for the full term, which is ideal if you want the certainty of a known return. Scotiabank and other institutions also offer market-linked GICs, where returns depend on the performance of a market index or underlying asset. Market-linked GICs protect your principal while giving some participation in market gains, though they typically provide only a portion of the upside in exchange for that safety.
Another important choice is whether to hold a GIC inside a registered account or a non-registered account. Registered GICs are held inside government-registered plans like a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). Registered GICs offer tax advantages: RRSP-held GIC earnings are tax-deferred until withdrawal, while TFSA-held GIC earnings are tax-free. Non-registered GICs are taxed as interest income; even when interest compounds and is only paid at maturity, the accrued interest generally must be reported and taxed annually. Issuers issue T5 slips for GIC interest over $50 each tax year.
How to shop for a GIC
GICs are offered by banks, credit unions and online brokerages, so comparing rates and terms across providers is worthwhile. Look beyond headline rates—check early redemption rules, compounding frequency, the exact maturity date, and any minimum investment requirements. Consider the financial institution’s reputation and whether investments are covered by deposit insurance where applicable. Typical terms you’ll encounter include one, two, three, four and five years, but shorter and longer options are also available to fit different goals.
How to buy a GIC at Scotiabank
Scotiabank offers a range of GIC products, from fixed-rate and redeemable options to market-linked choices. Here are practical ways to purchase a GIC with Scotiabank:
- If you’re already a Scotiabank customer and have an existing registered or non-registered investment account, you can buy a GIC online through your investment portal. The online process is designed to be quick and secure.
- If you bank with Scotiabank but don’t yet have an investment account, you can open an investment plan online and then purchase the GIC that matches your needs.
- If you’re not a Scotiabank customer, you can schedule an appointment at a branch to discuss options and open an account in person.
- If you prefer face-to-face service, you can visit any Scotiabank branch to speak with an advisor and complete your GIC purchase.
GICs can play several roles in a financial plan: they can be the core of a short-term savings strategy, a stable component of a diversified investment portfolio, or a conservative option within registered accounts to protect tax-advantaged space. With interest rates higher than they have been in many years, now can be a favorable time to secure a competitive rate on a GIC—particularly if you need predictability and capital protection.
Read more about GICs:
- Are GICs a good investment right now?
- Why GICs are a good addition to an RRSP or a TFSA
- What types of GICs are available in Canada?
- How GIC interest rates work
- 2022 Income Tax Guide for Canadians: Deadlines, tax tips and more
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