In 2012, I was surprised to see the annual interest rates for GICs offered for sale on InvestorLine and Investor’s Edge were the same or higher than the posted rates for GICs purchased directly from the respective financial institutions. Since BMO and CIBC didn’t directly or noticeably charge a fee or commission for the purchase of GICs, in 2012, how could they make any money by offering this service?
Written: 2012
Reviewed: 2023
Revised: 2023
A Hidden Fee When Buying a GIC
Whether you buy a GIC from a bank or trust company directly or whether you buy it through a broker like InvestorLine, you are paying a hidden cost.
You are agreeing to an interest rate that is less than the value of your money to the financial institution. Part of the profit they are making selling you the GIC at that rate is used to pay a commission to the seller. The commission might be paid to a local branch office, to a broker, or to InvestorLine or Investor’s Edge. So although it looks like you are not paying a commission or fee to purchase a GIC through a self-directed online account, you still are.
Under new rules, in 2023 if you start to buy a GIC at BMO InvestorLine, you will be shown a message telling you that a ‘hidden’ fee or commission is being paid to InvestorLine which is included in the interest rate you are receiving.
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