Owning a GIC means you hold a secure investment. If you need access to your money before the term is up, a redeemable GIC is a good option.
Redeemable GICs allow you to access your money before the term expires. But having that privilege also means the rates are lower than non-redeemable GICs. For example, a one-year redeemable GIC from RBC Royal Bank has an interest rate of 0.65% while a non-redeemable one from the same institution has an interest rate of 0.9%. (Looking for a higher rate? check out the best GIC rates).
As of Dec. 22, these are the rates on one-year non-redeemable GICs (on a minimum $5,000 investment):
|Financial institution||Interest rate|
|ICICI Bank of Canada||1.1%|
|RBC Royal Bank||0.65%|
|TD Canada Trust||0.5%|
As you can see, the rates vary significantly. The GIC rates offered by smaller institutions are similar to the rates on their high-interest savings accounts. But the GIC rates offered by some of the big banks are much lower than the rates on their high-interest savings accounts although there are transaction charges associated with these accounts.
The bottom line
A redeemable GIC is a good investment option if you need to withdraw your money quickly. However, the rates aren’t as high as non-redeemable GICs and a high-interest savings account might be a better alternative.