Key takeaways
- A GIC pays a fixed rate for a fixed term; you usually cannot take the money out early
- EQ Bank posted 3.00% for 1 year and 3.85% for 5 years (rates page checked Oct 5, 2026)
- Interest outside a TFSA is taxed every year as income
- Inside a TFSA the interest is tax-free; the 2026 TFSA limit is $7,000
- GICs at CDIC members are insured up to $100,000 per category
What is a GIC?
A GIC is a deposit you leave at a bank or credit union for a fixed term, from a few months to five years or more. In return, the bank pays a fixed interest rate. Your principal is guaranteed. Most GICs are non-redeemable: you cannot take the money out before the end of the term. Cashable GICs exist but pay less.
Newcomers use GICs for two things: savings they will not need for a while, and (for international students) the student GIC used as proof of funds for a study permit. See study permit proof of funds.
GIC rates as of October 2026
EQ Bank’s rates page (rates effective January 7, 2026, checked October 5, 2026) lists these GIC rates, the same for regular and registered GICs:
| Term | EQ Bank rate |
|---|---|
| 6 months | 2.70% |
| 1 year | 3.00% |
| 15 months | 3.00% |
| 2 years | 3.25% |
| 3 years | 3.60% |
| 5 years | 3.85% |
BMO’s NewStart program advertises $325 in bonus interest on a 1-year GIC, calculated on $50,000 at a 2.90% promotional rate. Big-bank rates change weekly and are often lower than online banks’ rates. Always get the current rate from the bank before you invest.
How the calculator counts
- Yearly compounding adds interest to the balance once a year. For an 18-month term, it compounds once and pays simple interest for the last 6 months.
- Monthly compounding adds interest every month, which earns slightly more.
- Simple interest is paid out to you and not reinvested. Terms under one year use simple interest.
- Tax is your marginal rate times the interest. Outside a TFSA, you report GIC interest each year as it is earned, even if you only receive it at maturity. Inside a TFSA, tax is $0.
Worked example
Priya puts $10,000 in a 1-year GIC at 3.00%, compounded yearly, outside a TFSA. Her marginal tax rate is 30%.
- Interest: $10,000 × 3.00% = $300
- Tax: $300 × 30% = $90
- She keeps $210 of interest, so $10,210 after tax.
In a TFSA she would keep the full $300. With monthly compounding the interest would be about $304. For 5 years at 3.85% compounded yearly, $10,000 grows to about $12,079.
TFSA or regular account?
If you have TFSA room, a GIC inside a TFSA is usually better, because the interest is never taxed. The TFSA dollar limit for 2026 is $7,000. You get room for each year you are a resident of Canada and 18 or older, starting with the year you become a resident. You need a SIN to open one.
Do not put more than your room into a TFSA: excess amounts are taxed at 1% per month. Check your room in TFSA and RRSP room in your first year, and find your tax bracket with the marginal tax rate calculator.
If you might need the money within a year, a high-interest savings account is more flexible. Compare the savings rates tracker.
How we handle offers. Offers on this page come from each bank’s own website and were last checked on October 5, 2026. Banks change offers often, so confirm the details on the bank’s site before you apply. No bank pays to be included or ranked here. If a link on this page ever earns us a commission, we will label it next to the link.