A Guaranteed Investment Certificate (GIC) is a deposit product issued by a Canadian bank or credit union where you lock in your money for a set period (typically 30 days to 5 years) in exchange for a guaranteed interest rate. Your principal is guaranteed — you cannot lose money. GICs are widely used by international students to meet IRCC's study permit proof-of-funds requirement, and by all investors as a safe component of a savings or investment portfolio.
GIC Basics: How They Work
When you purchase a GIC, you are lending money to a financial institution for a defined term. In exchange, the institution guarantees to return your full principal plus a fixed or variable interest rate at maturity.
Key characteristics:
- Guaranteed principal: Unlike stocks or mutual funds, you cannot lose your original deposit
- Fixed or variable interest: You agree on the rate when you purchase (fixed GIC) or tie it to a benchmark rate (variable GIC)
- Set term: Ranges from 30 days to 5 years. The longer the term, generally the higher the rate
- Redeemability: Most GICs are non-redeemable (cannot be cashed out early without penalty). Cashable GICs are more flexible but pay lower rates
- Issued by: Federally and provincially regulated banks, trust companies, and credit unions
Types of GICs
Fixed-Rate GIC
You lock in a specific interest rate for the full term. The most common type.
Example: You deposit $10,000 at 4.5% for 1 year. At maturity, you receive $10,000 + $450 = $10,450.
Variable/Market-Linked GIC
The return is tied to the performance of a market index (e.g., the TSX 60). Your principal is still guaranteed, but returns vary based on market conditions. Maximum return is typically capped.
Cashable (Redeemable) GIC
You can cash out after a minimum holding period (typically 30–90 days) without penalty. Lower interest rates in exchange for this flexibility.
RRSP/TFSA/FHSA GICs
GICs can be held inside registered accounts (RRSP, TFSA, FHSA). Interest earned is either tax-deferred (RRSP) or completely tax-free (TFSA). This is more tax-efficient than holding a GIC in a non-registered account.
Foreign Currency GIC
A GIC denominated in a foreign currency (typically USD). Useful if you expect to use the funds in a foreign currency but want them held safely in Canada.
GIC Interest Rates (2025 Context)
GIC rates change frequently based on the Bank of Canada's policy interest rate. In 2024–2025, with the Bank of Canada cutting rates from the 5% peak of 2023, GIC rates declined from their highs but remain competitive relative to savings accounts.
Typical 2025 ranges (approximate, market varies):
Where to find the best GIC rates:
- Oaken Financial (HomeEquity Bank) — consistently competitive rates
- EQ Bank — online bank, strong GIC rates
- Brokerages: GICs can be purchased through discount brokers (Questrade, CIBC Investor's Edge) from multiple issuers at competitive rates
- Ratehub.ca — Canadian GIC rate comparison tool
CDIC Insurance: Your Safety Net
GICs at CDIC member institutions are insured by the Canada Deposit Insurance Corporation (CDIC) — a federal Crown corporation.
CDIC coverage limits (as of 2023 rules):
Important: CDIC only covers GICs with a term of 5 years or less. It covers GICs at federally regulated member institutions (major banks, trust companies). Credit union GICs are covered by provincial deposit protection schemes (typically similar limits).
GIC for Study Permit Proof of Funds: How It Works
IRCC requires international students applying for a study permit to demonstrate sufficient funds. As of January 2024, IRCC accepts a Student Direct Stream (SDS) GIC as proof of funds — with specific rules.
IRCC GIC Requirements
- Must be purchased at a designated financial institution (DFI) approved by IRCC
- Minimum amount: CAD $20,635 (as of 2024; updated annually by IRCC)
- The GIC must be issued by the DFI and the confirmation letter provided with your study permit application
How the Student GIC Works
Unlike a regular GIC, the student GIC is structured to release funds on a schedule:
- Upon arriving in Canada and activating your student account, an initial lump sum is released (typically ~$10,000–$11,000)
- The remainder is released in monthly instalments over the academic year
This structure ensures the funds are available for living expenses throughout the year rather than all at once.
IRCC Designated Financial Institutions (DFIs) Offering Student GICs
As of 2025, IRCC-designated banks for the Student Direct Stream GIC include:
- Bank of Montreal (BMO)
- Bank of Nova Scotia (Scotiabank)
- CIBC
- HSBC Bank Canada
- National Bank of Canada
- RBC Royal Bank
- TD Canada Trust
- Desjardins
See our full guide on study permit proof of funds requirements: [Study Permit Proof of Funds](/articles/study-permit-proof-of-funds)
GIC vs. High-Interest Savings Account (HISA): Which Should You Use?
Rule of thumb: Use a HISA for your emergency fund (you need access). Use a GIC for money you know you will not need for 6–12+ months (e.g., a portion of a future down payment, study permit funds).
How to Purchase a GIC
At a Major Bank
Walk in or apply online. Straightforward process. Rates are often lower than online alternatives.
At an Online Bank
EQ Bank, Oaken Financial, and similar online banks offer GICs entirely online. Typically higher rates. Funds must be transferred from an existing account.
Through a Brokerage (GIC Marketplace)
Platforms like Questrade, CIBC Investor's Edge, and BMO InvestorLine offer a "GIC marketplace" where you can purchase GICs from multiple issuers through a single account, comparing rates side by side. This approach is especially useful for maximizing CDIC coverage by spreading deposits across different institutions.
Example Scenarios
Frequently Asked Questions
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