GIC Ladder
Échelle de CPG in French
Quick definition
A GIC ladder splits one amount into equal pieces across staggered terms, so a portion matures every year while the rest keeps earning longer-term rates.
How a ladder is built
Divide the money into equal rungs and buy a different term with each. With $50,000 and five rungs you buy $10,000 each of a 1, 2, 3, 4 and 5-year GIC.
At the end of year one, the 1-year rung matures. You either take the cash or reinvest it in a new 5-year GIC. At the end of year two the original 2-year rung matures, and so on. After five years every rung has been replaced by a 5-year GIC, and one still matures every single year.
That is the entire mechanism. Once the ladder is mature you earn 5-year rates on the whole balance while a fifth of the money comes free annually.
What problem it solves
Putting an entire amount into one term is a bet on interest rates. Lock in long before rates rise and you sit below market for years. Stay short before rates fall and you renew into worse ones. A ladder averages your rate across the cycle so neither call has to be right.
It also solves a practical problem that a single GIC cannot. Money that might be needed at some point, but not on a known date, does not fit a five-year lock-up. A ladder gives you a scheduled exit every year without paying the penalty for breaking a GIC early.
What it costs you
On a normally shaped rate curve, where longer terms pay more, a ladder finishes behind putting everything into the longest term. That is not a flaw; it is the price of the liquidity.
The gap is usually smaller than people expect. Across five rungs on a curve running from 4.00% to 4.25%, the ladder gives up a fraction of a percentage point a year against the all-long option, in exchange for annual access to a fifth of the money.
The ladder beats the all-short option in almost every scenario, because rolling one-year GICs forever means permanently taking the lowest rate on the curve.
Choosing rungs and terms
Five annual rungs is the classic structure because most Canadian GIC rate curves stop at five years, so a five-rung ladder uses the whole curve and frees money once a year.
If you need cash more often than annually, shorten the rung length rather than adding rungs: six-month rungs across three years give you access twice a year. If your horizon is longer than the available curve, the ladder simply keeps rolling into the longest term.
The same idea works with bonds, where it is called a bond ladder and adds the ability to sell a rung early on the open market, which a GIC cannot do.
Where to hold it
Inside a TFSA, RRSP or FHSA whenever you have the room. GIC interest is fully taxable as ordinary income at your marginal tax rate, and Canada's accrual rule taxes it in the year it is earned rather than the year it is paid.
In a taxable account, a ladder generates a T5 every year on interest that may still be locked inside a GIC. Inside a registered account none of that applies and the ladder is purely a liquidity and rate-averaging tool.
In Canada
Laddering is the most commonly recommended GIC strategy at Canadian banks and credit unions, and most institutions will set one up for you in a single appointment.
Brokerage GIC desks make ladders easier than branches do, because you can see dozens of issuers' rates for every term on one screen and buy each rung from whichever issuer pays best that day, while staying inside CDIC limits per institution.
A ladder built across several issuers also spreads deposit insurance exposure, which matters once the total exceeds the $100,000 per depositor, per category, per institution limit.
Worked example
Marc has $50,000 he might need some of within five years. He buys five $10,000 GICs at 4.00%, 4.05%, 4.10%, 4.15% and 4.25% for terms of one through five years, reinvesting each maturing rung at the five-year rate. Over five years the ladder grows to about $61,390, earning roughly $11,390 of interest, and hands him about $10,000 back every year along the way. Putting all $50,000 into a single five-year GIC at 4.25% would have reached about $61,567 instead, roughly $177 more over the whole period, with none of it accessible until the end.
Related terms
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated September 2026