Note: GIC rates shown are for non-redeemable GICs with annual compounding.
1-Year GIC Rate
as of August 2023
(+20% annual change)
1-Year USD GIC Rate
as of August 2023
(+36% annual change)
1-Year Bond Yield
as of August 2023
(+42% annual change)
A guaranteed investment certificate (GIC) offers a guaranteed rate of return over a certain time period. 1-year GICs are one of the most common term lengths for GICs. With a 1-year GIC, you’ll be investing your money for one year, after which you’ll receive your initial principal back, along with accrued interest that you have earned. This interest rate, known as the 1-year GIC rate, is usually a fixed rate. However, some types of GICs, such as cashable or redeemable GICs, may offer a different rate if you choose to withdraw from your 1-year GIC early. This would be the GIC’s early redemption rate, which is often lower than the base GIC rate.
With a GIC, your initial investment is protected, and it’s also eligible for CDIC insurance if you purchase a 1-year GIC from a participating CDIC member, which includes Canada’s major banks. 1-year GICs from credit unions may be eligible for deposit insurance by your provincial regulator. For 1-year GICs insured by the CDIC, the maximum coverage is $100,000 per institution. Be sure to check the limits for provincially-offered equivalent insurance if you’re looking to purchase a 1-year GIC from a credit union instead.
Most cashable GICs offered by banks have a one-year term. Meanwhile, non-redeemable GICs can have terms ranging from as little as 30 days to 10 years. In any case, 1-year GICs are usually offered for both non-registered and registered accounts. This means that you can purchase 1-year GICs for your TFSA, RRSP, RESP, or other registered account as an alternative to buying stocks or keeping your money in a savings account. Even with a high-interest savings account, 1-year GIC rates are often higher than most high-interest savings account rates. You can even purchase foreign currency GICs, such as USD GICs.
When it comes to choosing a GIC, one of the key decisions is whether you want a cashable or non-redeemable GIC. A cashable GIC can be redeemed at any time, while a non-redeemable GIC has a set term and cannot be cashed in early. The main advantage of a cashable GIC is that you have access to your money if you need it. The downside is that you usually get a lower interest rate than with a non-redeemable GIC.
When it comes to a 1-year term, it depends on your personal circumstances as to whether a cashable or non-redeemable 1-year GIC is better. If you're reasonably sure you won't need the money during the year, then a non-redeemable GIC will give you a higher interest rate. However, if there's a possibility you may need the money, then a cashable GIC may be a better choice.
The difference between cashable and non-redeemable 1-year GIC rates can be significant. For example, an 1-year cashable GIC from RBC has an interest rate of 2.25% as of August 2023, while an 1-year non-redeemable GIC from RBC has an interest rate of 4.05%. Going with a non-redeemable GIC might mean your interest earnings would be almost double than that of a cashable GIC!
In comparison, the difference between redeemable and non-redeemable 1-year GIC rates are not as dramatic. That’s because cashing out a redeemable 1-year GIC means that you’ll be earning a much lower redemption interest rate. Using the same example, RBC’s redeemable 1-year GIC had an interest rate of 3.00%, vs. the non-redeemable rate of 4.05%.
The table below compares the best non-registered 1-year cashable vs. non-redeemable and redeemable GICs in Canada, as of August 2023.
|Bank||1-Year Cashable||1-Year Redeemable||1-Year Non-Redeemable|
Note: Rates are as of August 26, 2022, for non-registered accounts.