There are a select few financial products on the market that are guaranteed to give you a return on your investment. One of those products is a guaranteed investment certificate (GIC).
With GICs, you are guaranteed to get back the amount of money you put in at the end of the term—plus interest.
GICs come in all shapes and sizes and their terms may vary from 30 days to 10 years. There are traditional GICs that pay a fixed rate of interest for a specific period of time. And there are market-linked GICs that pay an amount based on the performance of the index they track. That amount can vary and there’s no guarantee you’ll make additional money.
With hundreds of GICs to choose from and a variety of Canadian financial institutions that offer them, we decided to narrow down our top GIC picks for your TFSA.
The following are the best TFSA GIC rates available in Canada as of March 22, 2024:
We’ve compared 504 GICs at 43 nationally available banks and credit unions to find some of the best options available. See below to learn more about why we picked each GIC, the pros and cons, rates, minimum deposits and terms.
To create this list, Forbes Advisor analyzed 504 guaranteed investment certificates (GICs) across 43 financial institutions, including a mix of traditional brick-and-mortar banks, online banks and credit unions. We ranked each account on nine data points that included annual percentage yield, minimum deposit requirements, (low, medium and high) customer service, compound interest schedule, available terms and availability.
The following is the weighting assigned to each category:
Our research is based on information from the following financial institutions: RBC, TD, BMO, National Bank, CIBC, Scotiabank, UNI Financial, Canadian Western Bank, Coast Capital Savings, Digital Commerce Bank, EQ Bank, First Nations Bank of Canada, Laurentian Bank, Manulife Bank, Motus Bank, Peoples Bank of Canada, Simplii Financial, Tangerine Bank, VanCity, VersaBank, HSBC, Home Bank, ICICI Bank Canada, SBI Canada Bank, CTBC Bank, Bank of China (Canada), KEB Hana Bank Canada, Shinhan Bank Canada, Meridian Credit Union, Servus Credit Union, Envision Financial, Steinbach Credit Union, Affinity Credit Union, Prospera Credit Union, Conexus Credit Union, ConnectFirst Credit Union, Access Credit Union, Assiniboine Credit Union.
A TFSA GIC is a guaranteed investment certificate that you can put inside a tax-free savings account. Once there, your investment, including the interest it generates, can grow tax-free up to the prescribed annual contribution limit set by the CRA each year.
A GIC is a Guaranteed Investment Certificate that can be placed in any non-registered investment or savings account. A TFSA GIC is a GIC that goes into your tax-free savings account and is eligible for registered interest rate because a TFSA is a registered account, as in registered with the Government, which indicates its tax-sheltered status. On a regular GIC, you will have to pay tax on any gains, whereas any growth and contributions on a TFSA GIC are tax-free and so are the withdrawals. The one other note to keep in mind is that you can’t contribute foreign currency to registered accounts like a TFSA, so that’s certainly one drawback.
The main reason to invest in a TFSA GIC is for its tax benefits. Canadians with a tax-free savings account do no have to pay tax on their contributions (including interest) or withdrawals from the account up to the annual contribution limit. This also goes for a TFSA GIC, which will be placed inside of a TFSA as an investment. Plus, like a non-registered GIC that doesn’t have tax-sheltered status, your principal is protected, so you will always receive your initial investment back once the TFSA GIC’s term expires in addition to any interest the account has generated. The only caution one needs to exercise when investing in a TFSA GIC is knowing that they will typically receive a lower interest rate than they would get with a non-registered GIC.
For 2024, the annual contribution limit for a tax-free savings account is $7,000, up from $6,500 in 2023.
A TFSA GIC can be opened online or in-branch at any bank or financial institution that offers them. You’ll then make a deposit, (sometimes the GIC requires a minimum deposit in order to invest) choose your term and then not touch your money until the point the investment matures.
If the TFSA GIC is cashable, you can take your money out at any time without penalty. If it is non-redeemable, you won’t be able to take your money out until the end of the stated term, but you will likely receive higher interest than you would get with cashable TFSA GICs in exchange for having to wait until the maturity date to withdraw your funds.
Any interest earned from a GIC in a TFSA isn’t taxable. Interest income is taxed at the same rate as regular income and holding a GIC in a TFSA means you won’t owe money to the Canada Revenue Agency (CRA).
The answer to this question depends on your financial goals. For instance, if you plan to use the money for a down payment on a house or another large purchase, a non-redeemable GIC likely isn’t the best option if you need the money before the GIC matures. However, if you’re buying a non-redeemable GIC and don’t need the money before the GIC matures, it might make financial sense. If you buy a redeemable GIC, you can get the money before the GIC matures, but you also forfeit any future interest payments.
According to our analysis, we’ve given Escalator GICs from Motusbank our top marks. This is because every year the fixed interest rate offered goes up. As a result, the longer you keep your money in the GIC, the more interest you earn. Plus, after each year, you’ll get the option to convert your money to a different type of GIC, giving you some measure of flexibility and the amount you invest is not only fully guaranteed with the interest, but its also fully insured because it’s part of a registered account. Meanwhile, the APY generated by this account is not too shabby.
A TFSA GIC has the same provisions as a regular GIC when it comes to making a withdrawal. Typically if a GIC is non-redeemable, you cannot take out the money until the end of the term. If a GIC is cashable or redeemable, you can take out the money, but you receive less interest than a non-redeemable GIC upon withdrawal. Registered GICs like a TFSA GIC do not typically come in a cashable or redeemable variety.
In short, no. The word “registered” is what gives registered GICs their tax-sheltered or tax-deferred–where taxes are paid only on withdrawals–status. It means they are registered with the federal government through the CRA.
A high interest rate on a TFSA GIC is anything over 5%. However, a market-linked TFSA GIC may give you even more of a return, depending on the performance of the investments it is tied to.
TFSA GICs can be had from the majority of banks and credit unions in Canada, especially from the country’s “Big Six” banks.
Saven Financial, a division of FirstOntario credit union, currently offers a 5.45% interest rate on a 1-year TFSA GIC.
