How to buy Scotiabank GICs + MORE Mar 10th

A guaranteed investment certificate (GIC) may seem like your grandfather’s kind of savings product. After all, his generation was fond of similar investment tools, like government savings bonds and treasury bills, and benefited from periods where interest rates were high enough to make these low-risk products quite attractive.

Issued by banks and trust companies, GICs work much like a savings account with interest rates that are slightly higher. The main difference is you promise to leave the funds alone for a set amount of time—usually ranging from one to five years. Your principal is protected by the Canada Deposit Insurance Corporation (CDIC) (or provincial deposit insurance, for GICs with credit unions or trust companies), up to $100,000 per product, in most cases. You can have multiple insured GICs up to $100,000 in each of your RRSP, TFSA, non-registered accounts and joint spousal non-registered accounts at one financial institution, and do the same at another institution as needed to ensure your money is fully protected…

Guaranteed investment certificates (GICs) are a no-risk way to invest your money with the confidence that you’ll get back your principal plus interest. Usually, GICs offer interest rates that are better than savings accounts, especially now that the Bank of Canada’s recent rate hikes have boosted their returns. Over the long run, GIC returns may not be as high as those of stocks, but that’s part of the trade-off to avoid volatility.

Right now, GICs are having a moment—and that’s great news for Canadians who want to save towards a goal without risking a loss. Deciding to invest in a GIC is a solid first step, but you might feel like you need more guidance. Here’s how to choose the best GIC for your needs, and how to purchase a GIC at Scotiabank. 

Which GIC is right for you?

A GIC is an investment asset, but it also works like a loan to the bank. It’s how a bank borrows from you. You agree to give the bank your money and in return, they agree to give it back, with interest, on a set maturity date…

GICs have made a big comeback. The current higher-than-usual interest rates on guaranteed investment certificates have been one of the few bright spots in personal finance news. GICs may be a good place to set aside your money while you save towards a financial goal. Not only are they safe and secure, but you can select from a menu of different terms, interest rates and types—including registered and non-registered GICs, depending on where you plan to hold your investment.

Currently, GIC interest rates are the highest they’ve been in about 15 years, as much as 5.25%, due to a series of interest rate hikes by the Bank of Canada that began in March 2022. Generally, the longer the GIC term, the higher the interest rate. You can also choose from redeemable and non-redeemable options. Redeemable GICs are more flexible—you can cash them in anytime without penalty—but they tend to pay lower interest rates. (Learn more about how GICs work.)

Registered vs non-registered GICs: Which should you choose?

You can hold GICs in a registered or non-registered account, and you’ll need to indicate which one when you purchase the investment…

Guaranteed investment certificates (GICs) have always been a convenient and accessible option for Canadians who need a place to park their cash. GICs offer a better rate of return than a typical savings account. And right now, they’re paying out more interest than usual—the upside of Bank of Canada (BoC) rate hikes over the past year.

You can start investing in GICs with as little as $500. In this GIC guide for Canadians, we’ll show you how these versatile investments can help you preserve your purchasing power in the face of high inflation, without risk to your savings.

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How do GICs work?

A GIC is a type of investment asset. Buying a GIC is like making a loan to a bank (or another financial institution) for a set amount of time—from as little as 30 days to as long as 10 years—at an agreed-upon interest rate.

How GIC interest rates work: Canada’s rising interest rates have one major upside: higher returns on GICs…

Guaranteed investment certificates, or GICs for short, are low-risk investments offered by banks and other financial institutions. In exchange for committing your money for a term ranging from 30 days to 10 years, the bank will pay you a guaranteed rate of interest.

GICs are particularly safe because they give you a guaranteed return, unlike other investments that have variable returns, such as stocks and bonds. And when you invest in GICs at a financial institution that is a member of the Canada Deposit Insurance Corporation (CDIC), your deposits are eligible to be protected by government-backed insurance up to $100,000 per eligible account.

The low-risk nature of GICs makes them ideal when saving for a big goal with a deadline, like a down payment on a home or a big vacation, as well as when you want to protect your capital—for example, if you’re approaching retirement or already retired.

Recently, GIC rates have risen significantly. Let’s take a look at how GIC interest rates are determined…