If you want to shelter your interest income from a GIC, you can use either an RRSP or a TFSA. But if you want to make tax-free withdrawals at any time, you should use a TFSA.
Rates
Here are the best GIC rates on both redeemable and non-redeemable GICs (on a minimum $5,000 investment for a one-year term) as of Feb. 13:
| Financial institution | Interest rate |
| Hubert Financial | 2.05% |
| Oaken Financial | 1.75% |
| Canadian Direct Financial | 1.55% |
| Alterna Bank | 1.5% |
| FirstOntario Credit Union | 1.5% |
| Equitable Bank | 1.47% |
| ICICI Bank of Canada | 1.35% |
| Industrial Alliance | 1.3% |
| State Bank of India | 1.3% |
| Libro Credit Union | 1.15% |
| Manulife | 1.15% |
| RBC Royal Bank | 0.9% |
| BMO Bank of Montreal | 0.85% |
| Laurentian Bank | 0.85% |
| TD Canada Trust | 0.85% |
| CIBC | 0.5% |
As you can see, the interest rates at large financial institutions are significantly lower than those at smaller institutions. And in some cases, the interest rates offered by big banks are also less than what some smaller providers offer on their high-interest savings accounts.
The bottom line
When looking for a GIC for a TFSA, you want to get the best rate possible. That’s why you have to do a little bit of research if you want a better return on your money.