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Invest

HISA vs GIC: Which is right for you?

January 26, 2024
4
min read

Should you invest in a GIC or open a HISA? We’re here to help you determine which one is best suited to help you achieve your financial goals.

Woman holds papers using laptop

GICs and HISAs are both low-risk ways to grow your savings. Even though the products are similar, there are key differences between them.

One product is not necessarily better than the other; it all depends on your circumstances. So, how do you choose?

Before you can make your decision, it’s important to understand what makes each of these accounts unique. We met with Hayley Smyth, Personal Banking Advisor at Cambrian, to find out:

What is a high-interest savings account (HISA)?

HISAs are a type of bank account where you earn interest on the balance of your account. Your funds are readily accessible, and you earn a higher rate of return than you would with a chequing account or a standard savings account

“At Cambrian, all our saving accounts provide a single high interest rate, regardless of the balance of the account. No minimum deposit is required to open an account!” says Hayley.

High-interest savings account table with pros and cons.

What is a Guaranteed Investment Certificate (GIC)?

GICs are a type of investment where you earn interest for a defined term of 1-5 years.

GICs offer higher interest rates than savings accounts, but that comes at the cost of less flexibility. The funds can’t be withdrawn until the maturity date.

“A Guaranteed Investment Certificate, known also as a GIC or a term deposit, is an investment vehicle where you lock in funds for a specified period of time to earn a higher interest rate,” says Hayley.

Once your GIC matures, you’ll get back your initial investment, plus all the interest you’ve earned (which will depend on the rate and term of your GIC).

What are the differences between HISAs and GICs?

HISA
- Funds are liquid and accessible whenever.
- Ideal for short-term use.
- Variable interest rate, which may change without notice.
- Interest paid out monthly.
- Add funds anytime.
GICs
- Funds are locked in and can’t be withdrawn until the maturity date.
- Ideal for moderate-long term use.
- Fixed interest rate over a specific period of time.
- Interest paid out annually.
- You can only add funds on the maturity or renewal date.

Choosing between a GIC vs HISA

“I would suggest a GIC when you’re looking for a higher interest rate or you don’t need the funds for 1-5 years,” says Hayley.

“But if you need the funds for emergency situations, it’s best to keep them in an easily accessible account. If you have any plans for the funds or you may need them in the short-term, consider a HISA instead.”

Tax implications

The interest you earn on a GIC or HISA is considered taxable income. But if you hold your savings within a registered account (like a TFSA or an RRSP), you can shelter it from taxes.

“You can deposit your funds into a GIC whether they’re held in a TFSA, RRSP, or other registered account,” says Hayley.

“At Cambrian, we also offer Variable TFSAs & Variable RRSPs, where you can withdraw funds as you need them and still earn a high interest rate.”

Cambrian’s Rate Climber program

“A Rate Climber is a type of GIC that allows you to withdraw part of your funds on each anniversary date of the original deposit,” says Hayley.

“It’s a great option for members looking for a little more flexibility, or for those who feel they may require funds closer to the maturity date. However, the flexibility of a Rate Climber comes at the cost of a lower interest rate.”

“GIC Rate Climbers are redeemable on each 12-month anniversary date and at maturity. At Cambrian, you can choose a 3-year or 5-year term.”

Learn more about how a GIC laddering strategy works.

Start saving with Cambrian!

Whether you choose a HISA or a GIC, one thing stays the same: Your investment is safe with Cambrian. All your deposits are guaranteed without limit through the Deposit Guarantee Corporation of Manitoba.

As a local credit union, we offer higher rates on GICs and savings accounts. That’s one way we give back to our members, along with free banking through Unfee. Check out our rates on GICs and savings accounts today!

Today’s Rates

*All rates and yields subject to change without notice.
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