GIC and savings
A guaranteed investment certificate pays a known rate, taxed as ordinary income at your full marginal rate. That tax treatment — and where you hold it — usually matters more than the quarter point between issuers.
- Five-rung ladder
- After-tax interest
- HISA comparison
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The ladder
- Principal
- Interest to maturity
| Year 1$10,000 at 3.85% for 1 year | $10,385 |
|---|---|
| Year 2$10,000 at 3.95% for 2 years | $10,806 |
| Year 3$10,000 at 4.05% for 3 years | $11,265 |
| Year 4$10,000 at 4.10% for 4 years | $11,744 |
| Year 5$10,000 at 4.20% for 5 years | $12,284 |
| Interest in the first year | $2,015 |
Three ways to hold the same cash
Why a ladder rather than one term
| LiquidityA single five-year term gives you none until maturity | Every 12 months |
|---|---|
| Reinvestment riskYou are never forced to roll everything at one rate | Spread over five dates |
| Average yieldTrends toward the five-year rate as the ladder matures | 4.03% |
| CDIC coveragePer category, per member institution — split a large ladder | $100,000 |
Returns are compounded annually and assume interest is reinvested rather than paid out. A GIC paying interest annually to a chequing account earns simple interest and ends up slightly behind these figures.
In the ladder model each rung is held to its own maturity at its own rate, then rolled into a new five-year GIC at the five-year rate you entered for the remainder of the period.
After-tax figures apply your combined federal and provincial marginal rate to the interest. Interest is taxable in the year it accrues, even on a multi-year GIC that pays at maturity.
These results are illustrative estimates based on published 2026 rates and typical lender rules. They are not financial, tax, or legal advice, and they are not a mortgage or credit approval. See the methodology and disclaimer.
What the management expense ratio actually costs you over thirty years.
Contribution room since 2009, wrapper comparison, and the FHSA deduction.
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Build a budget from take-home pay, not gross, with savings-rate targets.