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Guaranteed Investment Certificates (GICs)



Frequently asked questions

  • What are GICs?
    A Guaranteed Investment Certificate (GIC) is a kind of investment that guarantees the money you put into it, no matter what happens in the market. There are lots of different types, but typically GICs have a fixed term, and you can’t cash them out until the term is up. What’s more – you’ll know exactly how much you’ll have at the end of the term because they usually have a fixed rate of return too.
  • Are GIC returns taxed?
    It depends – on what kind of account they’re in. If they’re in a registered account like an RRSP or TFSA, the money they earn won’t be taxed. If they’re in a non- registered account, the returns are taxed just like any other income.
  • How are GIC returns taxed?
    If your GICs aren’t in a registered account, they’re taxed the same way any other income is taxed by the CRA. If you have a multi-year GIC that isn’t sheltered, the interest you earn on each anniversary will be taxed, even if it hasn’t been paid to you yet. So that’s important to keep in mind!
  • Can I redeem GICs before they mature?
    Sure. If you have cashable (also called redeemable) GICs, you can redeem them before the end of the term. There might be limitations on exactly when they can be redeemed, depending on which GIC you have. Non-cashable GICs can’t be cashed before they mature without a penalty.
  • What are cashable GICs?
    Cashable (or redeemable) GICs give you the option of withdrawing money before the end of the term. This is handy if, for example, your investment plans change before the term is up, or you need some disposable cash. How much you can redeem and when, as well as how early redemption will affect your returns, depend on which cashable GIC you choose.
  • What are non-cashable GICs?
    Non-cashable GICs are term investments which can’t be cashed before the end of their term. They do have an advantage over cashable GICs though, as they usually offer higher rates of return.
  • What is the current GIC interest rate?
    It depends. Rates vary from one GIC to another, based on product features, term, and cashability, as well as the current interest rates set by the Bank of Canada. Then there are market- and fund-linked GICs, whose returns depend on how well the market or fund they are linked to is doing. A BMO Investment Professional can help you find a GIC with a combination of features and returns that works for you. View all GIC products and rates
  • GICs vs Mutual Funds: What’s the difference?
    They’re quite different, actually. The main difference is that with GICs the money you put into them, and often your return, is guaranteed. This makes them very secure compared to Mutual Funds. Because risk often goes hand in hand with reward though, Mutual Funds may have the potential to earn higher returns than GICs.There are other differences too. GICs typically have a fixed term during which you can’t access your funds or, in the case of cashable GICs, there may be limitations on when you can cash them. Mutual Funds don’t have these restrictions. And Mutual Funds are actively managed, so they have management fees associated with them, which GICs don’t.

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1$1,000 minimum investment is required, subject to the following exceptions: (i) $500 minimum investment required for GICs purchased within an Registered Education Savings Plan (RESP) and (ii) $5,000 minimum investment required if a monthly interest payment option is chosen (Note: this option is not available for registered investments such as RESPs, registered retirement savings plans etc.)
2Interest is paid annually or compounded annually and paid at maturity. Interest rates are subject to change at any time without prior notice. Cashable in full on each anniversary of the issue date (no partial redemptions permitted).
3U.S. Dollar Term Deposits are not eligible for Canada Deposit Insurance Corporation (CDIC) insurance coverage.
4BMO Fund Linked GIC is issued by Bank of Montreal Mortgage Corporation (BMMC) and guaranteed by Bank of Montreal.  The principal amount of the BMO Fund Linked GIC is guaranteed and is repayable upon maturity, but there is no guarantee you will receive any return linked to the performance of the underlying securities.  The rate of return will be the return on the Reference Portfolio, except that the rate of return will not be less than zero and will not be greater than the Maximum Rate of Return for the Term.  The rate of return is not an annual rate but is the rate of return over the entire term of the GIC. The return on the Reference Portfolio is equal to the weighted average of the percentage  changes in the prices of the securities comprising the Reference Portfolio, calculated as a percentage using the securities weightings set out in the Summary.  The percentage change in the price of a security in the Reference Portfolio is equal to the percentage increase or decrease between the price of the security on the second business day after the Issue Date and the Calculation Date.  The return on the reference portfolio will not include any distributions or dividends on the securities.  For more information about the BMO Fund Linked GIC, visit your local BMO Bank of Montreal branch.  BMO Exchange Traded Funds are managed by BMO Asset Management Inc., and investment fund manager and portfolio manager, and a separate legal entity from the Bank of Montreal.
“S&P” is a trademark of The McGrawHill Companies Inc.  “TSX” is a trademark of TSX Inc.  These marks have been licensed for use by Bank of Montreal.  The BMO Fund Linked GIC is not sponsored, endorsed, sold or promoted by Standard & Poor’s or the Toronto Stock Exchange and neither party makes any representation regarding the advisability of investing in the BMO Fund Linked GIC.