Compare GIC Rates
Did you know the best GIC rates might not be found at the big banks? Use our tool to find the best GIC rates from all the providers across Canada.
Cashable guaranteed investment certificates (CGICs) are a popular and well-known product offered by many financial institutions. The typical cashable GIC is a 1-year term with either a 30- or 90-day closed period during which your investment is locked in. After the closed period, the GIC can be cashed out at any time without penalty, making this a liquid investment. Because they offer this type of flexibility, the interest rates on cashable GICs tend to be lower than those on non-redeemable GICs of the same term. Here’s a quick look at why you might want to have cashable GICs make up part of your portfolio, and what to consider before purchasing one.
Did you know the best GIC rates might not be found at the big banks? Use our tool to find the best GIC rates from all the providers across Canada.
Cashable GICs are ideal for people who prioritize having access to their money over receiving the highest possible interest rate. If you anticipate a major purchase in the not-too-distant future, or want your rainy day fund to earn a little interest, a cashable GIC provides peace of mind that your savings can be accessed whenever you need it.
Cashable GICs are also useful if interest rates start to rise. Rather than being locked in for a set term, they allow you to quickly redeem and re-invest your money in a savings product that will pay you a higher return.
With that being said, cashable GICs offer benefits over high interest savings accounts, if interest rates are declining. While the rates on the two products may be similar, the cashable GIC allows you to lock in the interest rate at the time of purchase, whereas rates on high interest savings accounts are likely to move with the market. After the cashable GIC closed period, both products are similarly liquid.
Not surprisingly, the flexibility associated with cashable GICs comes with some downsides. First, in exchange for the product being cashable before maturity, financial institutions that offer cashable GICs pay slightly lower interest rates than they do on non-redeemable GICs. The GIC is locked in for the first 30 days (or 90 days in some cases) and, if you are able to withdraw during this period, you will lose any interest.
Like all investment products, it is important to understand all of the conditions associated with cashable GICs. Some of the more common features and restrictions you may encounter with these products include:
Remember that cashable GICs are ideal for those who prioritize having access to their money over receiving a higher interest rate on their investment. If you don’t need this form of liquid asset in your portfolio, there are a number of other GIC alternatives to consider. As always, it’s important to be clear on the terms and conditions of any investment you choose to purchase.
Many financial institutions offer GICs with a redeemable feature. Redeemable GICs are offered for a variety of terms and may be redeemed prior to maturity. The terms and restrictions of to these products vary greatly from one institution to another, so be careful to check the details on any redeemable GIC you’re considering.