The length of a GIC term varies – anywhere from 30 days to 5 years. The end of your GIC term is called “maturity” or the “maturity date.” When you buy a GIC, you need to decide when you’ll need access to your money; this is because the money that you invest will be locked in for the duration of the term. If you’ll need it soon, choose a shorter term. If you can leave the money alone for a while, choose a longer term. A longer term usually offers a higher interest rate.
Different types of GICs earn fixed, variable, or escalating interest – this affects how much your initial investment (or your “principal”) will grow over the term.
- GICs with fixed interest are super low-risk – you get a guaranteed rate, and you can predict how much you’ll earn.
- GICs with variable interest have rates that could change anytime. A variable rate GIC is tied to the Prime rate – so you benefit from higher interest when Prime goes up, but you take the risk that interest rates could drop. motusbank doesn’t currently offer variable rate GICs.
- GICs with escalating rates have fixed interest, but the rate goes up each year. The longer your money stays in the GIC, the more you earn.
GICs generally pay out interest annually or at maturity, though some pay it on a different schedule. Usually, interest is added to the balance of the GIC so it can compound and keep earning more. Compounding is great because the interest is added to your principal, and then that amount earns interest as well. Interest on interest.
At the end of your term, you can either renew your GIC plus the interest earned or ask for the funds to be paid out to your bank account.
As your maturity date approaches, we’ll contact you about getting your renewal instructions. You can also set up renewal instructions online. If we don’t hear from you, we’ll automatically renew your GIC into the same term at the prevailing interest rate.
As a federally regulated institution, motusbank is a member of the Canada Deposit Insurance Corporation (CDIC). This means that eligible deposits, including GICs, are insured up to $100,000.
To get more information on deposit insurance and coverage visit the CDIC