What is a cashable GIC?

How cashable GICs work

Traditionally, GICs offer Canadian investors three core benefits:

• Principal protection to ensure your money remains safely invested
• A guaranteed interest rate to ensure you get a fixed return on your investment
• Canada Deposit Insurance Corporation (CDIC) coverage of up to $100,000 per depositor (in the event of bank insolvency), subject to CDIC rules and regulations

In addition to these three core benefits, a cashable GIC offers investors the option of getting their money back even before the term of the GIC has ended, if they so choose. For example, as of Dec. 14, 2023, you could buy a one-year cashable GIC from Scotiabank at an interest rate of 2.85%. If you need your money back sooner than anticipated, you can redeem the GIC. There is no interest penalty for cashing out early—so you will get the interest earned to date—but you must hold the GIC for at least 30 days before you can do so. Cashable or redeemable GICs offer investors great flexibility but note that banks typically offer higher rates for non-redeemable GICs—currently even 5% for a one-year GIC, as shown in the table below.

Are cashable GICs a good investment?

Here are some reasons why cashable GICs may be a good investment:

• They’re eligible for non-registered and registered investment accounts, including registered education savings plans (RESPs), registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), registered disability savings plans (RDSPs), first home savings accounts (FHSAs) and tax-free savings accounts (TFSA).
• They can be used for tax planning—for example, by buying a GIC in an RRSP account to get a tax deduction, or by holding a GIC in an FHSA to get a deduction and tax-free growth—as long the money is eventually used towards buying a first home.
• They are flexible—giving investors the option of fully or partially redeeming their investment, depending on the type of product chosen.
• These GICs have a low minimum investment amount of $500 and no investment fees—making them accessible to smaller and newer investors.
• Cashable GICs are eligible for CDIC protection, up to $100,000 per depositor, at CDIC member institutions.

Given these benefits, a cashable GIC may be suitable for an investor who wants to combine the benefits of traditional GICs—like principal protection and a guaranteed interest rate—with the flexibility of cashing out anytime. (Note, however, that if you redeem within 30 days of the GIC’s issuance, you will forfeit the accumulated interest.)

If you’re saving up to buy a car or a home, for example, GICs are a safe and reliable way to grow your money and access it when you need it.

Can I transfer my GIC?

Canadians are accustomed to transferring their investments from one institution to another if needed—say, from one bank to another. However, unlike mutual funds, exchange-traded funds (ETFs) and stocks, GICs typically cannot be transferred. This is because a GIC is a contract between you and the institution, and each institution offers its own GIC interest rates, terms and conditions. So, if you’re buying a GIC, be prepared to hold it at the financial institution where you bought it. If you have a cashable GIC and you need to move your investments to another institution, you could cash in the GIC and reinvest the cash in a GIC at the new institution.

How to buy Scotiabank cashable GICs

If the ability to access your cash early is what you need, here are two options available through Scotiabank:

How do you buy a cashable GIC?

Cashable GICs are typically available wherever you buy your other GICs. For example, you can purchase Scotiabank GICs, including cashable/redeemable GICs, through a Scotiabank advisor. Book an appointment with an advisor online or by phone. Read more about Scotiabank GICs.