Canadian investors have faced high inflation for several years, and the Bank of Canada’s efforts to cool prices have kept interest rates elevated. That environment has pushed guaranteed investment certificate (GIC) yields higher, with some non-redeemable one-year GICs approaching 5% or more. While many people think of GICs as a way to lock money away, there are several varieties to fit different needs. One flexible option is the cashable or redeemable GIC, which lets you convert your investment back to cash before maturity under the product’s terms.
How cashable GICs work
GICs traditionally deliver three core benefits to Canadian savers:
- Protection of your principal so the amount you invest is preserved
- A guaranteed interest rate that ensures a predictable return over the term
- Coverage by the Canada Deposit Insurance Corporation (CDIC) for eligible deposits up to $100,000 per depositor, subject to CDIC rules
Cashable GICs include those same fundamentals and add the option to redeem your investment early. For example, on Dec. 14, 2023, Scotiabank offered a one-year cashable GIC at 2.85%. The product allowed redemption after an initial holding period—commonly 30 days—so you can access your funds relatively quickly if circumstances change. Keep in mind that early access terms vary by product and institution; many cashable GICs require an initial holding period before redemption is allowed, and redeeming prior to that period can lead to forfeited interest or limited access.
| 1-year non-redeemable GIC (paid annually) |
1-year non-redeemable GIC (paid semi-annually) |
1-year cashable GIC (paid at maturity) |
|
|---|---|---|---|
| Interest rate | 5% | 4.92% | 2.85% |
| Redeemable early | No | No | Yes |
| Eligible for registered accounts | Yes | Yes | Yes |
| CDIC-eligible | Yes | Yes | Yes |
Are cashable GICs a good investment?
Cashable GICs can be a worthwhile choice for many savers. Key advantages include:
- Account flexibility: Cashable GICs are available for non-registered and registered accounts, including RESPs, RRSPs, RRIFs, RDSPs, first home savings accounts (FHSAs) and TFSAs.
- Tax planning potential: Holding a GIC inside an RRSP or FHSA can provide tax advantages consistent with those account rules—for example, RRSP contributions may be tax deductible and FHSA growth may be tax-free if used for a qualifying first-home purchase.
- Liquidity options: Depending on the specific product, you can often redeem fully or partially, giving you access to funds when needs arise.
- Low entry cost and no fees: Many cashable GICs have modest minimum investments (often around $500) and no purchase fees, which makes them accessible to new or smaller investors.
- Deposit insurance eligibility: Cashable GICs at CDIC member institutions are generally eligible for CDIC protection up to applicable limits.
Because they combine principal protection and a guaranteed return with the option to access funds early, cashable GICs suit savers who want safety but also expect they may need liquidity within a short time frame. They are commonly used when saving for a planned short-term purchase—such as a car, down payment, or other expenses—where preserving capital is a priority but flexibility is helpful.
Can I transfer my GIC?
GICs are contracts between you and the issuing institution, so they usually cannot be transferred like mutual funds, ETFs or stocks. If you want to move a GIC to a different financial institution, the typical approach is to redeem or cash the GIC (subject to the product’s early redemption rules) and then reinvest the proceeds at the new institution. Keep in mind the timing, potential interest consequences and any account transfer rules for registered plans when planning a move.
How to buy Scotiabank cashable GICs
If accessing cash early is important to you, Scotiabank offers several redeemable GIC options you can consider. Two common forms are a one-year cashable GIC and a two-year personal redeemable GIC, each with different rates and terms.
| Cashable GIC | Personal redeemable GIC | |
|---|---|---|
| Minimum investment amount | $500 | $500 |
| Term | 1 year | 2 years |
| Annual interest rate | 2.85% | 4.75% |
| Partially or fully redeemable | Fully or partially | Fully or partially |
| Investment fees | No | No |
| Principal protection | Yes | Yes |
| Guaranteed interest rate | Yes | Yes |
| Eligible for registered accounts | Yes | Yes |
| CDIC-eligible | Yes | Yes |
How do you buy a cashable GIC?
Cashable GICs are available through most major banks and many credit unions. You can purchase them in branch, by phone or online, depending on the institution. If you prefer guidance, book an appointment with a bank advisor who can explain product features, holding periods and redemption rules. When choosing a GIC, compare the interest rate, minimum deposit, redemption penalties or holding period and whether the product is eligible for your intended account type (TFSA, RRSP, FHSA, etc.).
If your priority is safety and easy access to funds over the absolute highest yield, a cashable GIC is a practical choice.
This article is sponsored.
This is a paid post that provides information and highlights a client’s product or service. Content was written, edited and produced by MoneySense with the support of assigned freelancers.
Read more about GICs:
- How GIC interest rates work
- Will GIC rates keep going up in 2024?
- How to buy Scotiabank GICs
- What types of GICs are available in Canada?
- What is a market-linked GIC?
- Why GICs are a good addition to an RRSP or a TFSA