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How to beat the bank and boost your GIC return

When it comes to buying investment products, such as GICs, it’s easy to simply treat the buying process like a regular shopping trip. You may want to walk into a local branch of your bank, see and feel the paperwork, and make sure it’s the “right fit” for your investment portfolio. And we get it – when it comes to investing, we sometimes want to physically see what we are doing, so we know where our money is going.

This process, however, can also cost you. In particular, staying loyal to your bank could actually lose – not save – you money.

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How? Because, when you sit down with a sales representative from your bank branch, they are only able to sell you their products. So the best GIC rate they can offer you might not be (and honestly, probably isn’t) the best GIC rate available at other financial institutions. However, if you’re already there and feel like you should keep all your investments in one place, you may just agree to it – and that’s a mistake.

You still have some negotiating power.

How to Beat the Bank and Boost Your GIC Return

Negotiating with the bank doesn’t come easily to most of us — probably because it’s a big institution, so we feel as though rates are set in stone and they offer the same products to everyone. But that’s not always true. Here are some words to live by: If you don’t ask, the answer is always no. So the first thing you can do, if you aren’t happy with the GIC rate your bank offers you, is ask if they can do better.

How can you feel confident enough to ask? Research what GIC rates are offered by other financial institutions and take that information to your bank. Banks, like many businesses, also sell their products through a number of distribution channels, including online discount brokerages, independent deposit brokers, etc. So while the products are all the same, you can be offered a different rate for the same product from one distribution channel to the next.

For example, an independent broker may be able to offer you a slightly better interest rate on the same GIC product offered by one of the big banks, because of the volume of business they do and the little overhead they have to pay for. But they literally offer the exact same GIC product — just at a better rate. Take information like that to your bank and ask them to match the rate. If they won’t, you don’t have to settle — it’s your money to grow, not theirs.

What to Do If Your Bank Can’t Match the Best GIC Rate

If you’ve tried to negotiate and still aren’t happy with the GIC rate your bank offers you, consider these options:

  1. Talk to smaller financial institutions. We know from personal experiences on the team, as well as from what’s available on our site, that smaller financial institutions can almost always offer better GIC rates than what the big banks do. Equitable Bank and Oaken Financial are two examples of financial institutions that consistently offer better rates than what we see on any of the big bank’s sites.
  2. Talk to a deposit broker. As mentioned above, you can also sit down with an independent deposit broker and find out what rates they can get you. Similar to working with a mortgage broker, the benefit of working with a deposit broker is they work with multiple financial institutions so have access to a variety of products, and can pass along “discounts” in the former of slightly higher GIC rates.
  3. Do it yourself. Finally, if you know exactly what you’re looking for and consider yourself a savvy investor, you can buy GICs through our site (you’ll be put in touch with someone from the financial institutions we work with) or through an online discount brokerage, such as Wealthsimple. Brokerages operate fully online so you never have to go into a branch to talk to someone to buy a GIC.

And, as always, read through the content in our GIC education centre + check out our rates tables, so you are prepared to negotiate and get the best GIC rate and product for you.

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