Where to find the best GIC rates

With RRSP season wrapping up on next week on Feb. 29, many Canadians may still be unsure where to park their annual RRSP contribution.  

GICs are a safe option, though you have to shop around to get a rate that keeps pace with inflation. When interest rates are low, it's all the more important to shop around.  Yet too often we're loyal to our own lender and don't consider other financial institutions.

Related: Why I moved my savings to ING Direct

Interest rates offered by the big banks tend to lag behind credit unions and online banks like ING and PC Financial.  This chart compares the best 1, 3  and 5-year RRSP-eligible GIC rates posted online this week:

Both Canadian Tire and Ally offer competitive rates on GICs, however they are not RRSP-eligible.

The top credit unions are offering over 3 per cent interest on their 5-year RRSP-eligible GICs, while the best of the big banks are offering just over 2 per cent.  So $5,000 invested in a 5-year GIC with ICICI Bank will be worth $5,881 at maturity, compared to $5,547 if invested with TD, RBC or BMO.

Some of the best GIC rates can be found at Manitoba credit unions. If you don't live in Manitoba you're eligible to open an account by providing additional supporting documentation with the application.  Contact the lender directly to purchase a GIC.

Investing in GICs is not just about finding the best rates.  Terms and conditions are also important, things like whether it is redeemable or non-redeemable. Non-redeemable GICs usually offer a higher rate of return. They are ideal if you don’t need to access your funds before maturity. 

Cashable GICs give you the flexibility to access your money if needed, while still earning a competitive rate of return.

Minimum investments for GICs can range from $500 - $5,000, depending on the terms.  Typically the shorter the term, the higher the minimum investment will be.

Investors turn to GICs in order to preserve capital, but they shouldn't neglect to find and compare the best rates for their retirement savings.  

Also Read:

Being honest about investing risk tolerance

Four safe places to put your savings

Robb Engen is half of the Boomer & Echo personal finance blogging team with his mother, a former financial advisor.  Reach him at robbengen@gmail.com