Guaranteed Investment Certificates (GIC) are popular among Canadians because, whereas investing is generally seen as a risk, GICs promise you a return on your investment.
GICs are generally issued by banks or trust companies and are free to purchase. And in most cases, GICs pay a bit more in interest than traditional savings accounts. GICs are also considered a safe investment because your principal is secure. This means you are guaranteed to get back the amount you’ve deposited once your term is done.
Depending on the financial institution, there are many different types of GICs offering different term lengths and interest rates. Short-term and long-term, registered and non-registered, cashable/redeemable and non-redeemable, market-linked… But, ultimately, a good GIC gives you a competitive return on your investment.
So how does one go about choosing a GIC when there are so many available? We used our Best of Finance methodology here to find the accounts that provide the consumer the most in savings with beneficial features. Thus, here are our top three GICs for your consideration.
2019 Best of Finance Best GIC Category Winner
Why it’s an awesome GIC
Oaken Financial claims to be a refreshing alternative to traditional banking with no hidden fees and some of the highest rates on the market. A five-year GIC with Oaken comes with a three percent interest rate, while a one-year term comes with a extraordinary rate of 2.80 percent.
Interest is paid annually, or you can choose to have it compounded annually and paid at maturity. A minimum deposit of $1,000 is required, and the investment is non-redeemable. And if you’re currently an Oaken customer and have a savings account open, you can opt to transfer your savings to a GIC with ease.
Oaken has a few select locations across the country, so you have the option to speak to a person face-to-face about your finances. Otherwise, you’re free to check your account details and manage your funds through online and mobile banking
And all Oaken GICs and savings accounts are available through both Home Bank and Home Trust Company, which are members of CDIC. This means your deposits are eligible for CDIC coverage, up to applicable limits.
To determine the top performing savings accounts, chequing accounts, TFSAs and GICs, we calculated the total interest earned, based on the following:
- Balance: $100
- Savings Term: 5 years
- Monthly Fees: $0
Why it’s an awesome GIC?
As an online bank, you can bank with Motive from the comfort of your own home – online or via phone.
Motive says it can provide its customers with great rates and reduced fees by cutting out location expenses.
Motive promises competitive rates, low service fees, and personal service, and its GIC currently comes with an interest rate of 2.93 percent (for a five-year term). You can choose a term anywhere from one year to five years – though shorter terms come with lower rates – and the interest rate is guaranteed for the length of the term. The minimum investment is $1,000.
One of the great things about the Motive GIC is that you can choose to have your interest paid annually to your Motive Savings Account or have it compounded and paid at maturity (upon the end of the term). And once it matures, you can either have the GIC automatically renewed, or you can transfer to your Motive Savings Account.
This type of GIC is non-redeemable, so if you need to access the money earlier than the agreed term length, you will most likely incur a fee or penalty and won’t earn the interest accumulated thus far
2019 Best of Finance Best GIC Runners Up
Why it’s an awesome GIC?
EQ Bank has no brick-and-mortar locations, thus, the bank says it’s able to pass on those savings to its customers instead. EQ offers a high-interest GIC for a low cost – the minimum investment is only $100, which is relatively low in comparison to other GICs on the market. And though you can choose a term as short as nine months, you will get a lower rate. Rates currently sit between 2.55 percent and max out at three percent for the five-year term. Even at a one-year term, you are eligible for a 2.63 rate-of-return, which is greatly competitive for such a short term. And since EQ Bank is a member of the Canada Deposit Insurance Corporation (CDIC), your money is eligible for deposit insurance (up to a maximum of $100,000)
You can also choose to have your interest paid out at maturity or annually.