Should I choose a savings account or a GIC?
Choose a savings account if you might need the money at any time, and a GIC if you know roughly when you’ll need it and want the rate settled. Savings rates are variable; GIC rates are usually fixed for the term. Both are deposits, and in your own name at one CDIC member they share one $100,000 limit, including interest.
How each works
| Savings account | GIC (term deposit) | |
|---|---|---|
| Access | Withdraw any time | Locked for the term unless redeemable or cashable |
| Rate | Variable; can change any time | Usually fixed for the term |
| Good for | Emergency fund, near-term goals | Money with a known date it’s needed |
| Deposit insurance | Eligible deposit | Eligible deposit (terms over five years covered at CDIC members since April 30, 2020) |
What to check before you open one
- Whether a savings rate is a promotion and when it ends.
- Whether a GIC is redeemable, cashable or locked, and what happens at maturity.
- Who protects the deposit — CDIC, a provincial insurer, or a fintech’s partner arrangement.
- How a registered version (TFSA, RRSP, FHSA) is held — see registered accounts.
Renewal reminders
Under the federal consumer framework, banks must remind you before a term product of 30 days or more renews: 21 days and 5 days before the end of the term. Use the reminder to decide rather than letting it roll over by default.
Deposit insurance on savings and GICs
Savings, chequing and GICs held in your own name at one CDIC member share one $100,000 limit. Spreading money across institutions — or across categories such as a TFSA — can keep more of it covered.
Worked example · computed by the deposit insurance calculator
| Member | Category | Deposits | Covered | Over limit |
|---|---|---|---|---|
| Bank A | Own name | $130,000 | $100,000 | $30,000 |
| Bank A | TFSA | $45,000 | $45,000 | $0 |
| Bank A | Joint (Me + Partner) | $80,000 | $80,000 | $0 |
| Bank B | Own name | $60,000 | $60,000 | $0 |
$285,000 of $315,000 protected — the only gap is the $30,000 above the limit in Bank A’s one-name category. Check your own deposits →
A GIC ladder — several GICs maturing a year apart — keeps some money coming due every year.
Should I choose a savings account or a GIC?
Pick a savings account if you might need the money at any time. Pick a GIC if you know roughly when you’ll need it and want the rate settled for that stretch. Many people use both.
| Your situation | Usually a better fit | Why |
|---|---|---|
| You might need the money any day (an emergency fund) | Savings account | You can withdraw at any time. |
| You need it on a known date, like tuition next fall | GIC with a term that ends before that date | The rate is usually fixed for the term. |
| You’re not sure when you’ll need it | Savings, or a cashable or redeemable GIC | Ask exactly what early access costs before you buy. |
| You want some money coming due every year | A GIC ladder | See the worked example below. |
| You’re saving in a TFSA, RRSP or FHSA | Either, held inside the plan | Each plan type is its own CDIC category — see registered accounts. |
Current offers change often. Compare them in the savings rankings rather than relying on an advertised headline rate.
How does a GIC ladder work?
- Split the money
Illustration: $10,000 becomes five GICs of $2,000 each (5 × $2,000 = $10,000). - Stagger the terms
Buy one-, two-, three-, four- and five-year terms. - Renew long
Each year one GIC matures. If you don’t need the money, renew it for five years. - Settle into the rhythm
After four years, every GIC is a five-year GIC, but $2,000 still comes due every year.
How is GIC interest taxed if it’s only paid at maturity?
You usually pay tax on it every year, not just at the end. The CRA says that for most investments made in 1990 or later you must report the interest each year as it is earned, for each complete investment year, even if you didn’t get a T5 slip. The CRA’s own example: for an investment made on July 1, 2024, report the interest earned up to June 30, 2025 on your 2025 return.
You buy a three-year compound GIC on March 1, 2026. Interest is paid only at maturity in 2029. Even so, the interest earned up to February 28, 2027 goes on your 2027 return, the next year’s interest on your 2028 return, and so on. Hold the same GIC inside a TFSA and FCAC says you don’t pay tax on the interest.
Does interest count toward the $100,000 CDIC limit?
Yes. CDIC insures each category up to $100,000 including principal and interest. A GIC that starts just under the limit can grow past it.
You put $95,000 in a GIC in your own name at one CDIC member and keep $8,000 in chequing there. Together that’s $103,000 before any interest, so about $3,000 is already outside the own-name limit. Moving part of it to another member, or into a TFSA at the same member, can keep it all covered. Test your own numbers in the deposit insurance calculator.
What should I do when the renewal reminder arrives?
Under the federal framework, a bank must remind you 21 days and 5 days before a term of 30 days or more ends, and 5 days before a shorter term ends. Banks must also give you a website or phone number where you can get the current rate for deposit products such as GICs.
- Check the rate the bank will renew at, using the website or phone number it gave you.
- Compare it with other institutions in the savings rankings.
- Decide whether you still want the money locked in, or need it in savings.
- Tell the bank before the term ends if you don’t want the default renewal.
Common mistakes
- Putting emergency money in a GIC you can’t cash early.
- Ignoring the 21-day and 5-day reminders and letting the GIC roll over by default.
- Leaving savings in an account after its promotional rate ends. FCAC suggests reviewing your account when a promotion ends.
- Forgetting that GICs and chequing in your own name at one member share one $100,000 limit.
- Skipping the yearly interest on a compound GIC at tax time.
What to ask before you buy a GIC
- Is it cashable, redeemable or locked in? If I take money out early, what do I lose?
- Is interest simple or compound, and when is it paid?
- What happens at maturity if I do nothing?
- Is the institution a CDIC member or covered by a provincial insurer? Check the CDIC member directory.
- Is this a promotional rate, and does it apply to the whole term?
What this means for you
The choice comes down to when you will need the money. Match each pot of money to the right product, then manage the dates.
| Money | Where it usually fits | What to check |
|---|---|---|
| Emergency fund | Savings account | Whether the rate is promotional and when it ends |
| A cost on a known date, like tuition next fall | A GIC with a term that ends before that date | What happens at maturity if you do nothing |
| Money you might need early | Savings, or a cashable or redeemable GIC | Exactly what you lose by taking money out early |
| Savings you want coming due every year | A GIC ladder | That the terms are staggered a year apart |
When a renewal reminder arrives — 21 and 5 days before a term of 30 days or more ends — check the rate the bank will renew at, compare it in the savings rankings, and tell the bank before the term ends if you don’t want the default renewal. At tax time, report interest on a compound GIC each year as it is earned, even though it is paid at maturity; inside a TFSA, the interest isn’t taxed.
Finally, watch the limit. Savings, chequing and GICs in your own name at one CDIC member share one $100,000, including interest, so a GIC that starts close to the limit can grow past it. Spread larger sums across members or registered categories, and test them in the deposit insurance calculator.
Frequently asked questions
Are GICs CDIC insured?
Eligible GICs at CDIC members are covered up to $100,000 per category, combined with other deposits in that category. Terms longer than five years have been eligible since April 30, 2020.
Does CanadianBanks.ca list savings rates?
Yes. The rate tracker shows posted GIC rates read from nine institutions’ own pages on November 2, 2026, and the big banks’ posted rates since 2016 from the Bank of Canada; the savings ranking lists the posted savings rates institutions give FCAC. Rates change often, so confirm on the institution’s own page.
Do I pay tax on GIC interest before it’s paid out?
Usually, yes. The CRA says that for most investments made in 1990 or later you report the interest earned in each complete investment year, even if it isn’t paid until maturity and even without a T5 slip.
Does GIC interest count toward CDIC coverage?
Yes. CDIC covers each category up to $100,000 including principal and interest.
When will my bank remind me about a GIC renewal?
For terms of 30 days or more, 21 days and 5 days before the term ends. For shorter terms, 5 days before.
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