GIC (Guaranteed Investment Certificate)
CPG (Certificat de placement garanti) in French
Quick definition
A GIC (Guaranteed Investment Certificate) is a deposit with a bank, trust company or credit union that guarantees your principal and pays a fixed or minimum rate of interest for a set term, anywhere from 30 days to 5 years or more.
What a GIC actually is
A GIC is not a stock or a fund; it is a loan you make to a financial institution. You hand over a lump sum, the institution promises to return every dollar of it at the end of the term, and it pays you interest along the way or at maturity. The rate is usually fixed when you buy, so you know the outcome to the penny on day one.
Terms run from 30 days to 5 years or more, and longer terms usually pay higher rates. Interest may be paid out annually or left to grow through compound interest until maturity, depending on the version you choose.
The three main types
Not all GICs behave the same way when you want your money back.
- Non-redeemable: the highest rate, but your money is locked in until maturity. Breaking one early is usually impossible or costly.
- Cashable or redeemable: a lower rate in exchange for flexibility. You can typically withdraw after an initial waiting period of 30 to 90 days without penalty.
- Market-linked: your principal is protected, but the return is tied to a stock index instead of a fixed rate.
A warning about market-linked GICs
Market-linked GICs sound like the best of both worlds: stock market upside with no downside. In practice the upside is capped by participation rates and maximum returns, the calculation methods are opaque, and if the index finishes flat or down you can earn nothing at all for several years. Many buyers end up with returns below a plain fixed-rate GIC bought the same day. If you want market exposure, take it directly; if you want a guarantee, take the fixed rate. Mixing the two usually delivers a disappointing version of each.
Deposit insurance: who protects your money
GICs at CDIC member institutions (banks, trust companies and federal credit unions) are covered by the Canada Deposit Insurance Corporation up to $100,000 per depositor, per insured category, per institution (as of July 2026). The "per category" part is powerful: deposits held individually, jointly, in a TFSA, in an RRSP, in a RRIF and in an FHSA are each separate categories, each with its own $100,000 of coverage at the same institution.
Provincial credit unions are not covered by CDIC. They are covered by provincial deposit insurers instead, and several provinces (including Manitoba, Saskatchewan, Alberta and British Columbia) offer unlimited coverage on credit union deposits. In Québec, deposits with Desjardins are covered by the Autorité des marchés financiers (AMF) up to $100,000 (as of July 2026).
The practical rule: check who insures the institution before you buy, and if you hold more than the limit in one category at one CDIC member, spread it across institutions or categories.
Laddering: the classic GIC strategy
Locking everything into one term forces a bet on interest rates. A GIC ladder avoids the bet: split the money into equal parts across 1, 2, 3, 4 and 5-year terms. Every year one rung matures; you reinvest it into a new 5-year GIC, which typically carries the best rate.
After the initial setup, your entire ladder earns 5-year rates while one fifth of the money comes free every year. You get liquidity, an averaged interest rate across the cycle, and no need to guess where rates go next.
Tax: the accrual rule
GIC interest is fully taxable as ordinary income at your marginal tax rate, with no special treatment like capital gains or dividends get. Worse, the accrual rule means you must report the interest earned each year even if the GIC does not pay you a cent until maturity. A 3-year compounding GIC generates a tax bill in years one and two on money you have not received yet.
This is why GICs sit best inside a TFSA, RRSP or FHSA, where the interest compounds without any yearly tax drag. In a taxable account, a GIC is one of the least tax-efficient investments you can hold.
When GICs make sense
GICs shine when the money has a known date and cannot be put at risk: a house down payment in 2 years, tuition next fall, the safe slice of a retirement portfolio. The guarantee is real and the outcome is certain.
The hidden cost is inflation risk. A guaranteed 3.5% is a guaranteed loss of purchasing power in any year inflation runs above 3.5%, and after tax the bar is higher still. GICs protect dollars, not what dollars buy, so they suit short and medium horizons better than decades-long growth goals.
In Canada
The GIC is a distinctly Canadian product, the close cousin of the American certificate of deposit (CD) but with its own insurance regime and tax quirks. In Québec the same product is called a CPG (certificat de placement garanti).
GICs are sold by virtually every Canadian bank, credit union and online brokerage, and rates vary widely between institutions for identical terms (as of July 2026). Online banks and brokerage GIC desks frequently pay noticeably more than the posted rates at big bank branches, so comparing takes minutes and pays real money.
Most GICs are eligible for registered accounts, and buying them inside a TFSA, RRSP or FHSA neutralizes their biggest weakness, the yearly tax on accrued interest.
Worked example
Priya puts $20,000 into a 3-year non-redeemable GIC at 4% (as of July 2026), compounding annually and paid at maturity. Her balance grows to $20,800, then $21,632, then $22,497 at maturity, for $2,497 of interest. In a taxable account at a 35% marginal rate, she owes tax on $800 of accrued interest for year one and $832 for year two, even though she receives nothing until the end, and the tax bill totals about $874 over the three years. Inside her TFSA, the same GIC pays the same $2,497 and she keeps every dollar.
Related terms
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated July 2026