No doubt, investing in a Guaranteed Investment Certificate (GIC) can be confusing even for seasoned investors. Ontario has a lot of great GIC rate options, making it challenging to narrow your selection.
If you’re looking to invest in Guaranteed Investment Certificates (GICs) in Ontario, you’ve come to the right place.
Here we compare the best GIC rates in Ontario from the top financial institutions to help make an informed decision.
Best GIC Rates in Ontario
There are different GIC rates to choose from in Ontario. However, not all of them could offer the best results. This begs the question: what are the best GIC rates in Ontario?
The following are the current best GIC rates in Ontario for your consideration.
1. People’s Trust
People’s Trust is one of the providers of the best GIC rates in Canada. Its Ontario branch is located at 95 Wellington St W Suite 1310, Toronto, ON M5J 2N7.
With more than 37 years of experience, People’s Trust offers competitive GIC rates in Ontario with non-registered, tax-free and RRSP GICs.
As of the time of writing this review, People’s Trust has the following non-registered GIC rates:
- 1-year = 1.90%
- 2-year = 2.10%
- 3-year = 2.30%
- 4-year = 2.40%
- 5-year =2.60%
2. ICICI Bank Canada
The ICICI Bank Canada is also a provider of competitive GIC rates in Ontario. The company is scattered across five locations in Ontario, namely:
- Don Valley Parkway
- Downtown Toronto
They offer a variety of duration options as well as highly competitive rates, so you’re sure to find something to suit your needs, whether you’re looking for a short-term or long-term investment.
Furthermore, ICICI offers foreign currency GICs, which are ideal for investors who want to invest in currencies other than Canadian dollars.
No matter what term you choose, ICICI Bank Canada offers some of the best interest GIC rates in Ontario.
The following are the non-redeemable GIC rates offered by the ICICI Bank Canada:
- 1-year = 0.80%
- 2-year = 1.00%
- 3-year = 1.40%
- 4-year = 1.60%
- 5-year = 1.85%
3. Wyth Financial
Wyth offers a wide range of competitive, simple products to help you reach your savings goals faster.
Their GIC rates are also one of the best in the industry, and it’s backed by the Canada Deposit Insurance Corporation (CDIC).
With C$1,000 minimum investment amount and C$150,000 maximum investment amount, Wyth offers competitive non-registered GIC rates as follows:
- 1-year = 1.80%
- 2-year = 00%
- 3-year = 2.30%
- 4-year = 2.40%
- 5-year = 2.60%
4. Oaken Financial
Oaken Financial is the division of Home Trust, offering competitive GIC rates in Ontario and other parts of Canada.
As one of the new online banks popping up in the country, Oaken caters to those looking for low fees and low-interest rates on registered and non-registered GICs accounts.
With a $1,000 minimum deposit and CDIC protection, you can earn more from your investment than from a traditional GIC provider.
The following are the non-redeemable long-term GIC rates of Oaken Financial.
- 1-year = 1.80%
- 2-year = 2.00%
- 3-year = 30%
- 4-year = 2.40%
- 5-year = 2.60%
5. LBC Digital
LBC is headquartered in Toronto, Ontario, providing low-fee GIC rates.
With a $100 low minimum deposit and CDIC protection, it offers competitive non-registered and non-redeemable GICs in Ontario and other parts of Canada.
The following are the current non-registered and non-redeemable GIC rates of LBC Digital:
- 1-year = 1.30%
- 2-year = 1.90%
- 3-year = 2.10%
- 4-year = 2.20%
- 5-year = 2.25%
6. EQ Bank
EQ Bank is our last but not the least best GIC rate provider in Ontario due to its competitive rate, low minimum deposit and zero banking fee.
You can choose from competitive registered and non-registered GICs with flexible terms and high rates on EQ Bank.
Here are the current EQ Bank non-registered GIC rates.
- 3-Month = 2.00%
- 6-Month = 1.30%
- 1-Year = 1.55%
- 2-Year = 2.10%
- 3-Year = 2.40%
- 4-Year = 2.40%
- 5-Year = 2.50%
- 6-Year = 2.50%
- 7-Year = 2.55%
- 10-Year = 2.65%
What is a GIC?
A short form for a Guaranteed Investment Certificate (GIC). This is one of the safe investments with high returns that allows you to lock up your funds for a particular period in exchange for a guaranteed period. This means you don’t have to worry about sudden interest increases.
GICs are typically low-risk investments, especially those issued by members of the Canadian Deposit Insurance Corporation (CDIC).
GIC rates, fees, minimum and maximum amount varies by provider. Above all, your GIC rate determines your investment returns.
This makes it essential to choose the best GICs rates out there, which we have just discussed above.
There are different types of GICs, but they can be summarized into two: Liquid and non-liquid GICs. Liquid GICs are those that allow you to cash out any time without penalty.
On the other hand, non-liquid GICs do not allow you to redeem them before maturity may come with other restrictions.
Types of GICs?
Here are the major types of guaranteed income certificates (GICs):
1. Registered GICs
A registered GIC is a type of GIC with no tax implications. The interest you earn from a registered GIC is tax-free, allowing you to earn more money than you would from a fixed-term deposit.
If you have a registered account like a TFSA or RRSP, then this type of GIC is advantageous for earning interest.
Depending on your Registered account, how much you can invest in a registered account varies significantly.
2. Non-Registered GICs
A non-registered GIC is the direct opposite of a registered GIC. Contributions, interest and withdrawals on non-registered GICs are subject to income taxes.
However, non-registered GICs have competitive rates and higher investment limits compared to registered GICs.
With a low minimum deposit, you can easily deposit non-registered GIC according to your budget.
3. Redeemable GICs
As the name implies, a redeemable GIC is a type of GIC that you can redeem before the investment matures. This is ideal for funding emergencies while investing.
Depending on the GIC terms, you may be charged early withdrawal or fees for redeeming your GIC before maturity.
Redeemable GICs are suitable for short-term investment goals as they offer low-interest.
4. Non-Redeemable GICs
A non-redeemable GIC is the direct opposite of a redeemable GIC. In this case, you can’t withdraw from your investment until maturity.
Depending on the GIC agreement, you may withdraw from your GIC before maturity, subject to certain penalties.
A GIC of this type increases in value over time, making it ideal for investors looking for a long-term investment opportunity with a maximum return on their investment.
For this reason, redeemable GICs are the best option for investors who want the security of a GIC but want to cash out from their investment before it matures.
5. Cashable GICs
This is one of the popular types of GICs, suitable for investors looking for short-term gains. You can cash out from a cashable GIC within 30 – 90 days of investing.
However, cashable GICs have lower returns compared to regular GICs.
Nevertheless, the liquidity of cashable GICs makes them ideal for funding emergencies while investing.
6. Foreign Currency GICs
Foreign Currency GICs are often in USD, ideal for investors looking to earn returns with a currency other than Canadian dollars.
With a foreign currency GIC, you can earn a return on your investment in Canadian dollars. Obviously, foreign currency GICs are a simple and affordable way to invest in foreign currency.
GICs offer you the ability to protect your money from fluctuating exchange rates for a certain period, protecting you from market risk.
Since foreign currency GICs are not insured by the CDIC, you may lose your gains in the event that your GIC provider runs out of business.
7. Market-Linked GICs
Here only your principal deposit is guaranteed, but the interest is determined based on particular market performance.
You get guaranteed returns on market-linked GICs based on the performance of a given market index. However, you’ll get your money back if the market performance falls below the minimum return.
An investor looking for greater rewards with a great deal of risk might find this combination of a GIC and a stock market investment appealing.
Pros and Cons of GICs
While GICs are some of the safe investment vehicles with high returns, it’s essential to know their pros and cons before subscribing.
Here are the major pros and cons of GIC you should consider:
- You earn a guaranteed return on your investment without worrying about market fluctuations
- A low-risk portfolio helps you avoid surprises
- It allows your investment to grow over time
- Deposit protection by the CDIC
- Low return compared to other investment accounts
- Not reliable in the case of emergency
How are GIC Rates Calculated?
GIC rates are calculated based on the GIC type and term. Redeemable GICs usually have low-interest rates with high liquidity, making them ideal for investors looking for short-term gains.
On the other hand, non-redeemable GICs are the best option for investors with long-term investment objectives looking for high returns.
In the case of a two-year GIC with a 1.25% interest rate, if you invested $200,000, you would get $2,500 every year in interest, and at the end of two years, you will get $5,000 in interest.
If the payment were compounded monthly, you would earn even more at the end of two years than in the example above.
So if you want to earn the most from compound interest, be careful about the payment schedule.
It’s essential to know how your bank or financial institution calculates the GIC rate because once you sign the contract, you’re subject to the terms and conditions.
Ultimately, you should review the payout terms since they determine how much interest you will earn on your overall investment.
Where Can I Purchase a GIC in Ontario?
You can buy a GIC from online or deposit brokerage as discussed below.
The above best GIC rates providers all operate online. This means you can directly purchase your chosen GIC through any of the companies discussed.
While different GIC providers have different requirements, you will likely be required to provide your Social Insurance Number and other means of identity while submitting your application.
Depending on the type of GIC you choose, your principal investment will be withdrawn upon deposit in exchange for a GIC.
2. Deposit Brokerage
You can also buy GIC in Ontario through a deposit brokerage. Deposit brokerages partner with several GIC providers, helping you compare different options before investing.
Deposit brokerages can also help you make a cost-effective decision in choosing the perfect GIC that suits your situation.
If you’re a beginner or looking for an alternative means of buying GIC in Ontario, you can’t go wrong with a deposit brokerage.
How to Buy GIC in Ontario
After identifying your best means of buying GIC, the next step is to make an application. Based on the term you choose, you will be required to make a principal deposit which will be converted to GIC.
However, it’s essential to determine your favourite GIC term and investment budget before submitting an application.
Comparing redeemable vs non-redeemable and registered vs non-registered GICs will help you make a cost-effective decision.
Once you have set everything in order, you can initiate the application process and make deposits.
Final Thoughts on the Best GIC Rates in Ontario
Now you know the best GIC rates in Ontario and how to choose the perfect one for you. While GICs have low risk with high returns, investing in the right one will help you make the most of your investment.
This makes it essential to look beyond the interest rates when narrowing your selection of the best GIC.
Considering the ideal GIC account and term for your situation is also crucial when deciding which GIC is perfect for you.
Overall, the best GIC rates in Ontario should inform your selection decision.
If you have any questions or need more clarification about this review, kindly comment below.