Guaranteed Investment Certificates (GICs) are a cornerstone of safe and reliable investing in Canada. They stand out by guaranteeing your initial investment (principal) while offering predictable returns, making them an especially strong choice in today’s unpredictable economic climate.
But not all GICs are the same. Depending on your financial goals, flexibility needs, and risk tolerance, you can choose from several types of GICs. In this guide, ScoopRate Canada breaks down the main options so you can better understand which type of GIC fits your savings strategy.
GIC Types at a Glance
1. Non-Redeemable (Standard) GICs
Best for: Higher guaranteed returns
The Scoop: With a non-redeemable GIC, your money is locked in until the end of the term. In return, you usually earn a higher rate compared to cashable GICs.
- Pros: Better rates for committing your funds.
- Cons: No early withdrawals—your money is inaccessible until maturity.
2. Cashable & Redeemable GICs
Best for: Flexibility and liquidity
The Scoop: A cashable or redeemable GIC lets you withdraw your funds before maturity, sometimes after a short lock-in period (e.g., 30 or 90 days).
- Pros: Access to funds in case of emergencies.
- Cons: Interest rates are typically lower than non-redeemable GICs.
3. Market-Linked (Equity-Linked) GICs
Best for: Growth potential with principal protection
The Scoop: These GICs tie returns to the performance of a stock market index or basket of companies. While your principal is guaranteed, your interest depends on how the market performs.
- Pros: Potential for higher returns than traditional GICs.
- Cons: If markets underperform, you may earn little or no interest.
4. Interest Rate-Linked GICs
Best for: Tracking interest rate changes
The Scoop: Interest rate-linked GICs (sometimes called variable-rate GICs) move with a benchmark, such as a bank’s prime rate. Your return can move up (or down) over the term depending on rate changes.
- Pros: Can benefit if interest rates rise.
- Cons: If rates fall, you’ll earn less.
5. Foreign Currency GICs
Best for: Exposure to global currencies
The Scoop: Foreign currency GICs are offered in USD, euros, or other currencies. They can help diversify your holdings but come with currency exchange risk.
- Pros: Currency diversification.
- Cons: If the Canadian dollar strengthens, your returns may shrink.
6. Structured & Specialty GICs
Best for: Investors seeking unique features
The Scoop: Some GICs are designed with special interest structures, like:
- Escalator GICs: Interest rates increase each year of the term.
- Raise-the-Rate GICs: Allows you to “bump up” your rate if market rates rise during your term.
These products provide more flexibility and can be useful in changing interest rate environments.
7. International Student GICs
Best for: Meeting study permit requirements
The Scoop: International student GICs are a special program designed for newcomers studying in Canada. They provide proof of funds and structured disbursements to cover living expenses during studies.
- Pros: Helps with visa approval and financial planning.
- Cons: Limited availability—only select banks offer them.
Final Thoughts: Choosing the Right GIC
With so many GIC types available, the best option depends on your financial goals:
- If you want safe, predictable growth, a non-redeemable GIC is your best bet for maximizing returns.
- If you value flexibility, consider a cashable GIC for access to your money.
- If you’re seeking growth potential, a market-linked or specialty GIC may offer higher returns while protecting your principal.
At ScoopRate Canada, we believe that understanding your options is the first step to smart saving. We compare the best GIC rates in Canada so you can find the right mix of safety, flexibility, and return for your savings.