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By MoneySense Editors on February 17, 2023

What are GICs?

By MoneySense Editors on February 17, 2023

Why are Canadians investing in GICs right now? Learn about how GICs work in the MoneySense Glossary.

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When you buy a guaranteed investment certificate (GIC), you lend money to a financial institution for a specified amount of time, or term, ranging from one month to 10 years. When the GIC reaches its maturity date, you get your money back plus interest—in general, the longer the term, the higher the interest rate. There are some GICs that pay interest during their term, either monthly, every few months or annually. GICs can have either a fixed or a variable interest rate. The minimum investment is usually $500. If you cash in a GIC before it matures, you may have to pay a penalty, depending on the type.
Example: “Raj diversified his investment portfolio with a mix of equities, bonds and GICs.”

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Interest rate: 4%

Interest rate: 4%

Aside from GICs, a safe (and more flexible way) to grow your money is in a savings account. View Canada’s best savings accounts for 2024.

Why trust us

MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.

Read more on GICs:

The best GIC rates in Canada
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
A guide to guaranteed investment certificates (GICs)
Wondering if GICs have a place in your savings and investing plans? We explain the different types, how they work, what the risks are (yes, even these “safe” investments carry some risk) and how to use them.
What types of GICs are available in Canada?
With GICs, you can grow your money without risk. We explain the benefits of investing in GICs and the different types you can choose from.
6 times when a GIC is a smart investment choice
Yes, they’re conservative—and that’s precisely why there are life stages and circumstances when a guaranteed investment certificate is the right investment choice.
Are GICs right for retirees who want fixed income?
Skittish investors like GICs’ guarantee of their principal, but it’s important to look at the total return on your investment.
Why GICs deserve a place in any fixed income portfolio
As interest rates rise, Frank is looking to GICs because his bond funds aren’t making gains.
Market-linked GICs: The pros and cons for investors
These GICs track the markets, offering low risk and some upside potential to investors. Here’s how to know if market-tracked GICs are for you.
How GIC returns are taxed in Canada
GIC interest rates are incredibly high—should you invest? Find out how GICs work and how GIC interest is taxed so you can keep more of your money.

About MoneySense Editors

MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.

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