Are GICs covered by CDIC insurance?

GICs from CDIC member banks are insured up to $100,000 per insured category per institution, including interest. Accounts like TFSAs, RRSPs, RRIFs and FHSAs are covered separately. Credit union GICs are covered by provincial deposit insurers instead, with limits that vary by province.

Should I build a GIC ladder when interest rates are rising?

A ladder works in rising-rate environments because a rung matures every year and is reinvested at the new rate. If you expect rates to keep rising, you can weight the ladder toward shorter terms or build it gradually.

Should I hold GICs in a TFSA or RRSP?

GIC interest is taxed as ordinary income at your full marginal rate, so holding GICs in a TFSA, RRSP or FHSA usually makes sense. Compound GICs in a non-registered account require you to report accrued interest every year, even before you receive it.

Can I rebalance my portfolio with GICs?

Non-redeemable GICs cannot be sold before maturity, so you cannot use them to buy stocks during a market drop. Keeping part of your fixed income in a high-interest savings account, cash ETF or bond ETF, and laddering your GICs, keeps some money available for rebalancing.

09 Nov 2026 7 min read Advice

How to Use GICs the Right Way - A Guide to Building a GIC Ladder

Q: What is a GIC ladder?

A GIC ladder splits your money across several GICs that mature in different years, usually one to five years. Each time one matures, you reinvest it in a new five-year GIC. You earn long-term rates while having money come due every year.

A while back I wrote about why your "safe" GIC is actually a gamble. The short version - GICs aren't the problem. Using them as your whole plan is.

So how should you use them? This post covers what a GIC actually is, where it fits in a real portfolio, and how to build a GIC ladder that works whether rates are rising, falling, or doing something weird.

What a GIC actually is

A Guaranteed Investment Certificate is a loan you make to a bank or credit union. You hand over a lump sum for a fixed term, anywhere from 30 days to 10 years. They pay you interest and give your principal back at the end.

No stock market, no daily price swings.

A few variations you'll run into:

Non-redeemable - Your money is locked until maturity. These pay the highest rates and are the standard building block for a ladder.
Cashable / redeemable - You can pull money out early, usually after 30 or 90 days. You pay for that flexibility with a lower rate.
Variable-rate - The rate floats with the bank's prime rate. Useful when rates are rising.
Market-linked - Returns tied to a stock index, with capped upside. I skip these.

How safe is "guaranteed"?

GICs from banks are covered by CDIC deposit insurance up to $100,000 per insured category, per member institution, including interest. The categories matter - deposits in your own name, a joint account, your TFSA, your RRSP, your RRIF and your FHSA are each covered separately. Credit-union GICs are backed by provincial insurers instead, and some provinces cover far more than $100,000. Check your province before you deposit.

The real risks are the ones I covered in the last post - inflation, reinvestment risk, and opportunity cost. Your principal is safe. Your purchasing power isn't guaranteed.

Where GICs fit in your overall portfolio

Here's the rule I use - match the money to the timeline.

Money you need in the next 1-5 years - GICs, high-interest savings, or cash. A house down payment, a car, next year's tuition, or the first few years of retirement spending.
Money you won't touch for 10+ years - Equities. Volatility is the price of admission for long-term growth, and over decades it's a price worth paying.
Everything in between - A blend, tilted more conservative as the date gets closer.

GICs are a fixed-income tool. They can replace some or all of the bond portion of a portfolio, and they have one big advantage over bond ETFs - the value never drops on paper. A 4% GIC is worth exactly what it says, every single day.

But they have one big disadvantage too, and almost nobody talks about it. You can't rebalance with them. When stocks crash 30%, the textbook move is to sell some of your safe assets and buy equities on sale. A locked-in GIC can't be sold. If your entire fixed-income allocation is non-redeemable GICs, you've given up your best tool for buying the dip.

My fix is simple. Keep some of your fixed income liquid (a HISA, a cash ETF, or a bond ETF), and build your GICs as a ladder so something is always maturing soon.

What is a GIC ladder?

Instead of putting $50,000 into one five-year GIC, you split it across five GICs that mature one year apart, or every 3-6 months.

Here's what that looks like with illustrative rates close to what online banks are offering right now:

Rung	Amount	Term	Illustrative rate
1	$10,000	1 year	3.70%
2	$10,000	2 years	3.90%
3	$10,000	3 years	4.00%
4	$10,000	4 years	4.00%
5	$10,000	5 years	4.10%

That's roughly $1,970 a year in interest.

When the one-year GIC matures, you roll it into a new five-year GIC. Repeat every year. After four years, every rung in your ladder is a five-year GIC earning five-year rates, but one of them matures every 12 months.

You get long-term rates with annual access to your money, and you never have to guess where rates are going.

Building your ladder for different market conditions

The classic equal-weighted ladder is designed to work without forecasting. But if you have a view, you can tilt it.

When rates are rising

This is roughly where we are now. The Bank of Canada raised its policy rate to 2.5% on October 28, 2026, its first hike since July 2023, and markets are pricing in a real chance of another one.

In a rising-rate environment:

Weight the short end. Put more into one- and two-year rungs so more money comes up for renewal at higher rates.
Build it gradually. Instead of deploying everything today, add a rung every few months.
Consider variable-rate or cashable GICs for a portion, so you aren't stuck if rates jump.

A ladder already handles rising rates on its own - every year, a rung gets reinvested at the new rate.

When rates are falling

Flip it. Weight the long end. Lock in more at four- and five-year terms before rates drop further. Rolling one-year GICs in a falling-rate world means renewing at a lower rate every single year.

When the yield curve is flat or inverted

Sometimes one-year GICs pay as much as five-year GICs, or more. When the extra reward for locking in is small, there's little reason to commit for five years. A shorter ladder (one to three years) keeps your options open at almost no cost.

When you have no idea

Most of the time. Use the equal-weighted ladder and stop checking rate tables. This is the whole point.

Building your ladder for different purposes

Retirement income and sequence-of-returns protection

This is where GICs shine. Line up rungs to mature in the years you'll need the cash. Three to five years of planned spending in a ladder means you never have to sell equities during a crash to pay the bills.

Inside a RRIF, match your maturity dates to your minimum withdrawal schedule so the cash is there when the withdrawal is due.

A known future expense

Saving for a home in your FHSA or tuition in an RESP? You don't need a full ladder. You need money that's available on a specific date.

Use a target-date ladder. As the goal gets closer, buy GICs that all mature just before the date. If you're three years out, buy a three-year GIC now, a two-year next year, and a one-year the year after.

Emergency fund overflow

Keep three months of expenses in a HISA. If you hold more than that, ladder the rest in three-, six-, nine- and 12-month GICs. Something matures every quarter, and you earn more than the savings account pays.

Tips and tricks that actually matter

1. Skip the Big Five for GICs. Rates change constantly, but online banks and credit unions routinely pay about a full percentage point more than the big banks on the same term. On $50,000, that's about $500 a year for doing nothing different.

2. Ladder inside your brokerage. Most discount brokerages sell GICs from multiple issuers. You can build a five-rung ladder across five banks inside one TFSA without opening five accounts.

3. Spread across issuers. That also keeps you under the CDIC limit at each institution once your ladder crosses six figures.

4. Put GICs in registered accounts first. GIC interest is taxed as regular income at your full marginal rate, which is the worst-taxed type of investment income. Compound GICs held outside a registered account are worse - you report the accrued interest every year, even though you haven't received a cent. More on that in my T5 post. A TFSA, RRSP or FHSA makes the problem disappear.

5. Turn off auto-renew, or set a reminder. Many banks automatically roll a maturing GIC into the same term at their posted rate, which is rarely their best rate. Put every maturity date in your calendar.

6. Choose your interest payment. Need income? Pick monthly or annual payouts. Building wealth? Pick compound interest and let it ride, ideally inside a registered account.

The bottom line

A GIC isn't a strategy. It's a tool with a specific job - protecting money you'll need on a known timeline.

Used as your whole plan, it quietly loses ground to inflation. Used as a ladder for retirement income, a down payment, or the safe side of your portfolio, it's one of the most underrated tools Canadians have.

Match the money to the timeline. Ladder it so something is always maturing. And keep your long-term money working.

This post is for educational purposes only and isn't financial advice. Rates shown are illustrative and change frequently, so confirm current rates with the institution. Consider speaking with a qualified financial advisor about your situation.