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Guaranteed investment certificates, or GICs, come in many varieties. One popular type is the short-term GIC.
Choosing which short-term GIC to put your money into often depends on how much interest you can earn. Below, you’ll find the best rates currently available in Canada for short-term, non-redeemable and fixed-rate GICs.
Compare top short-term GIC rates
Financial institutions do not present term lengths the same way, and some banks prefer to use days instead of months to indicate the length of the GIC’s term.
Before buying a GIC, confirm the term deposit’s actual date range so you can accurately calculate the return you can expect to earn on your investment.
Best 30-day and 60-day GIC rates
Top rates available for GICs with terms up to 30-days (1 month) and up to 60-days (2 months). The estimated return is based on a $10,000 deposit.
|Financial Institution||1-month||est. return||2-months||est. return|
|Canadian Western Bank||1.90%||$15.62||2.10%||$34.52|
|Home Trust||Not offered||N/A||2.30%||$37.18|
|HSBC Bank Canada||1.00%||$8.22||1.25%||$28.29|
|Kindred Credit Union (Ontario only)||Not offered||N/A||1.75%||$4.04|
|Manulife Bank||Not offered||N/A||3.90%||$63.04|
|Meridian Credit Union||1.75%||$14.38||1.75%||$28.77|
|Oaken Financial||Not offered||N/A||2.25%||$36.37|
|Peoples Bank of Canada||2.30%||$18.90||2.30%||$37.81|
Best 90-day and 120-day GIC rates
Top rates available for GICs with terms up to 90-days (3 months) and up to 120-days (4 months). The estimated return is based on a $10,000 deposit.
|Financial Institution||3-months||est. return||4-months||est. return|
|ATB Financial (Alberta only)||1.12%||$27.31||1.28%||$41.73|
|Bank of Montreal (BMO)||1.30%||$31.70||1.50%||$48.90|
|Canadian Western Bank||2.25%||$55.48||2.50%||$82.19|
|Coast Capital Savings||1.20%||$29.59||1.50%||$49.32|
|EQ Bank||2.10%||$51.78||Not offered||N/A|
|HSBC Bank Canada||1.50%||$36.99||1.55%||$50.96|
|Kindred Credit Union (Ontario only)||1.80%||$43.89||Not offered||N/A|
|Manulife Bank||4.15%||$101.19||Not offered||N/A|
|Meridian Credit Union||2.00%||$49.32||Not offered||N/A|
|Peoples Bank of Canada||2.30%||$56.71||2.30%||$75.62|
|Royal Bank of Canada||1.25%||$30.48||Not offered||N/A|
|Tangerine Bank||1.50%||$36.99||Not offered||N/A|
Best 180-day and 270-day GIC rates
Top rates available for GICs with terms up to 180-days (6 months) and up to 270-days (9 months). The estimated return is based on a $10,000 deposit.
|Financial Institution||6-months||est. return||9-months||est. return|
|Bank of Montreal (BMO)||1.60%||$78.47||1.95%||$143.71|
|Bridgewater Bank||Not offered||N/A||2.50%||$184.25|
|Canadian Western Bank||3.00%||$147.95||Not offered||N/A|
|Canadian Imperial Bank of Commerce (CIBC) Bonus Rate GIC||3.25%||$160.27||3.50%||$258.90|
|Coast Capital Savings||1.60%||$79.78||2.75%||$204.93|
|HSBC Bank Canada||2.10%||$103.56||2.25%||$166.44|
|Kindred Credit Union (Ontario only)||1.90%||$93.18||2.85%||$210.04|
|Laurentian Bank of Canada||0.90%||$44.14||1.95%||$143.71|
|Meridian Credit Union||2.75%||$135.62||3.25%||$240.41|
|National Bank of Canada||1.50%||$74.79||1.85%||$137.86|
|Peoples Bank of Canada||3.70%||$182.47||2.70%||$199.73|
|Royal Bank of Canada||1.50%||$73.56||1.75%||$128.97|
|Valley First (British Columbia only)||0.40%||$19.62||2.50%||$184.25|
» MORE: Looking for a GIC with a longer term? Explore more of the best GIC rates in Canada
What to know about short-term GICs
What is a short-term GIC?
Your principal deposit is guaranteed with a short-term GIC, so you’ll never come away with less than you originally invested. But, because the terms are short, you’ll earn limited interest. Some 90-day GICs, for example, pay less than 1% interest.
How do interest rates work on short-term GICs?
Financial institutions usually advertise fixed-rate GICs with annual interest rates, which means you can find out exactly how much interest you’d earn on your investment over the course of a year.
However, since you’ll hold a short-term GIC for less than one year, you won’t earn that total annual rate of interest. Instead, you’ll only earn interest at that annual rate of return during the GIC’s term, and that return on your principal investment will be less than you may expect.
How to calculate GIC return
While long-term GICs earn compounding interest — interest on your principal investment plus any interest you’ve already earned — short-term GICs do not. Instead, you’ll only earn interest on your principal investment, so you’ll need to use simple interest to calculate the rate of return.
To determine how much interest you’ll earn on your principal, follow this formula:
Simple interest earned = Principal investment x Interest rate x Time (in years).
This is quite easy with a one-year GIC.
For example, let’s say you put $1,000 into a one-year GIC paying 5% interest.
- Simple interest earned = $1,000 principal investment x 5% interest x 1-year term
- Simple interest earned = $1000 x .05 X 1
- Simple interest earned = $50
In this scenario, your GIC would earn $50 in interest at maturity.
However, this calculation gets more complicated for GICs held for less than a year. To calculate the rate of return here, you’ll need to convert the number of days in your term to a number measured in years before using the same simple interest formula.
For example, let’s say you put $1,000 into a 182-day GIC paying 5% interest.
- Simple interest earned = $1,000 principal investment x 5% interest x (182 days in the term / 365 days in a year).
- Simple interest earned = $1,000 x 0.05 x 0.499.
- Simple interest earned = $24.95.
In this scenario, your short-term GIC would earn you $24.95 in interest at maturity.
Are GICs good for a short-term investment?
Depending on the interest rate offered, a GIC can be a smart alternative to some basic and high-interest savings accounts. They’re secure, the returns are guaranteed and they don’t require much maintenance. If that’s important to you, a GIC investment is likely worth your money.
If you have an amount of cash that you don’t plan on touching for several months, a short-term GIC can help you earn a few extra dollars. It’s a great way to start investing. You can even earn tax-advantaged interest by purchasing a GIC within your TFSA or by using funds in your RRSP to buy GICs.
To get maximum value from a GIC, you need to keep your money parked for the full term. And if you’re not comfortable committing to that, make sure you get a cashable or redeemable GIC that allows you to withdraw your money early without penalty.
And if you’re comfortable investing your money for a little longer, you can always consider purchasing longer-term GICs, which are sold in yearly increments, to get access to higher interest rates and the ability to grow your return through a GIC ladder.