Term Deposit
Dépôt à terme in French
Quick definition
A term deposit is money placed with a financial institution at a fixed rate for a fixed period, with the principal guaranteed. In Canada the everyday retail version is the GIC, and the two names are largely interchangeable.
Mostly another name for a GIC
"Term deposit" is the generic, international name for locking money in at a fixed rate for a fixed term. In Canada, the product you will actually be sold under that description is almost always a GIC, and that entry covers the details: types, laddering strategies, the tax treatment of interest and the market-linked variants. This page is mostly about the naming.
Banks tend to say GIC; credit unions and caisses often say term deposit for what is functionally the same product. Some institutions use both labels side by side, occasionally reserving "term deposit" for shorter terms and "GIC" for longer ones. If you are comparing offers across a bank and a credit union, you are comparing the same species under two names.
What actually varies between offers
Whatever the label, three features do the real work:
- Term length: from 30 days to 5 years or more, with longer terms usually paying higher rates.
- Redeemable or not: non-redeemable deposits pay more but lock the money until maturity; redeemable ones allow early withdrawal at a lower rate.
- When interest is paid: annually to your account, or compounded and paid at maturity.
Not a bond
A term deposit is sometimes described as bond-like, but the difference matters: a bond trades on a market, so its price moves with interest rates and you can sell it any day, while a term deposit has no market price and no resale; you hold it to maturity, full stop.
Who insures it
Term deposits at banks and other CDIC member institutions are covered up to $100,000 per depositor, per insured category, per institution. Deposits at provincial credit unions, where the term deposit label is most common, are covered by provincial deposit insurers instead, with limits that vary by province and reach unlimited coverage in several of them. In Québec, Desjardins deposits are covered by the Autorité des marchés financiers. Check which regime applies before you buy; the answer follows the institution, not the product name.
Term deposit or savings account?
The dividing line is whether the money has a date. Funds with a known destination, tuition next fall, a car in two years, suit a term deposit: the locked rate is typically higher and the lock removes temptation. Money that might be needed on no notice, an emergency fund above all, belongs in a HISA, where the rate can change but the money never has to wait for a maturity date.
In Canada
The vocabulary splits along institutional lines: GIC dominates at the banks, term deposit at credit unions in the rest of Canada, and dépôt à terme at Desjardins and other Québec institutions. The generic phrase also matches what the product is called in most other countries (time deposit in the United States, term deposit in Australia and elsewhere), which is why international guides use it. Everything a Canadian needs to decide on one, rates, types, insurance details and tax, lives in the GIC entry.
Worked example
Nadia has $15,000 earmarked for tuition due in 18 months and $10,000 as an emergency fund. At her credit union she puts the tuition money into an 18-month non-redeemable term deposit at a fixed rate, since the date is known and the money must not shrink. The emergency fund stays in a HISA: it earns a little less predictably, but it is available the day the furnace dies. Same institution, two jobs, two tools.
Related terms
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated August 2026