What’s the Best Rate I Can Get for My Money for 1 to 2 Years from a GIC?

Previously, I looked at where I could park the money for our next car in a daily interest bank account and what interest rate I might be able to get. Next, I looked at what rates I could see for guaranteed investment certificates, GICs, both cashable and non-redeemable.

What Rate Are the Big 5 Canadian Banks Offering for GICs?

This is tricky to answer because most banks *post* a certain interest rate but you can sometimes get them to offer 0.25-0.5% more if

  • you ask
  • you have $10 000 or more to invest
  • you offer them other business like a mortgage or loan
  • you have been a “long time” client
  • you ask them to price match a competitor’s published or otherwise guaranteed rate

GIC Rates for a 1 Year Non-redeemable GIC

The banks often offer specials and short-term deals. There may be better rates available even an hour after I post this. The purpose is to show readers that the Big Banks generally are not offering as high a rate as the more competitve, more eager for your money, smaller banks.

The posted rates today (November 12, 2015) are

GIC Rates for a 2 Year Non-redeemable GIC

The posted rates today (November 12, 2015) are

  • BMO 1.05%
  • CIBC 0.85%
  • RBC 0.95%
  • ScotiaBank 1.1%
  • TD 0.95%

What Rates Are the Online and Smaller Banks Offering for GICs for 1 and 2 Year Terms

Here are some examples, though, of what other banks are offering. (Again, these were listed on November 12, 2015) These are CDIC insured GICs.

  • Tangerine
    1 Year: 1.2%;
    2 Year: 1.35%
  • PC Financial
    1 Year: 1.095%;
    2 Year: 1.194%
  • Oaken Financial
    1 Year: 1.95%;
    2 Year: 2.1%

You can see why I’m not recommending spending much time trying to get a great rate from a Big Five bank! It’s easier just to buy a GIC from one of the smaller players.

Make Sure Your GIC IS Safely Insured Against Financial Problems at the Issuing Company

Always check before buying though that the institution has CDIC insurance for its GICs.

Some trust companies and credit unions have other forms of insurance. You’d have to decide whether those other forms are reliable enough for you. I figure that if they have CDIC coverage just like the Big Five do, then it’s as good as I’m likely to get.

Why Buy a GIC When a Daily Interest Savings Account Offers More?

Given these very low rates for GICs, it actually makes more sense for me to keep this money in a daily interest savings account with a promotional interest rate! For example, I’m getting 3% right now for my money at Tangerine due to a special offer. I could be getting 2.6% from Zag bank.

There is no benefit to me for locking up my money where I can’t get at it for a fixed term of 1 or 2 years if the GIC interest rate is lower than what I can get on a daily interest savings account!

The only reasons I can think of to buy a 1 year or 2 year non-redeemable GIC right now are

  • if you think that the special promotional daily interest rates will drop below the current GIC rate during the next few months
    I doubt that given some places like Oaken Financial have been offering a steady daily interest account rate of at least 1.75% for over a year.
  • if you think you will spend the money if you can get at it so you want to lock it up where the bank won’t let you touch it until the term is up

For now, I’m going to keep our money in a daily interest savings account but I’ll keep watching the interest rate promotions both for bank accounts and GICs to see whether I should move the money elsewhere.

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Where do you keep cash you’ll need in 1-3 years? Do you shift it to maximize what meager returns you can receive? Please share your strategy with a comment.

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