🟡 Intermediate · Step 13 of 22 · Topic: Banking, Budget & Saving

In one sentence

High-interest savings accounts and GICs let your savings earn interest with very low risk, and this post explains how each one works and how your deposits are protected.

Words to know

• Interest rate: the yearly percentage a bank pays you for keeping your money there.
• High-interest savings account (HISA): a savings account that usually pays more interest than a chequing account. You can take money out any time.
• GIC (guaranteed investment certificate): a deposit you leave at a bank for a set time, called the term, for a guaranteed rate.
• Redeemable GIC: a GIC you can cash out before the term ends. A non-redeemable GIC usually can’t be cashed early.
• CDIC: Canada Deposit Insurance Corporation. It protects eligible deposits at member banks if the bank fails.

Step 1: Understand a high-interest savings account

A HISA works like a normal savings account. You can add or take out money any time. The bank pays you interest, often calculated daily and paid monthly.

The rate is not fixed. The bank can raise or lower it at any time. A HISA is a common home for an emergency fund, because the money is safe and easy to reach.

Step 2: Read promo rates carefully

Banks often advertise a high “promo” rate. Before you move money, check:

• How long it lasts: often only a few months. Then the regular rate applies, which can be much lower.
• Who qualifies: sometimes only new customers or only new money.
• Any limits: the promo may apply only up to a set amount.

Write down the date the promo ends. Then compare the regular rate with other banks.

Step 3: Understand GICs

With a GIC, you lock your money for a term, such as 1 year or 5 years. The rate is guaranteed for the whole term. You get your money back, plus interest, at the end.

• Non-redeemable GIC: usually pays a higher rate. You usually can’t take the money out before the term ends.
• Redeemable (or cashable) GIC: you can take money out early, but the rate is usually lower.

A GIC fits money you know you won’t need for a while, like savings for a goal in 2 years.

Step 4: Build a GIC ladder

A ladder means splitting your money into several GICs with different terms. One GIC matures (ends) each year. This gives you two benefits:

• Some money becomes available every year.
• You are not locked into one rate for all your money.

Each time a GIC matures, you can use the money or put it into a new long-term GIC. The Example below shows how.

Step 5: Check your CDIC protection

CDIC protects eligible deposits up to $100,000 per depositor in each insured category. This includes principal and interest. Categories are separate, so your total coverage can be more than $100,000.

• Categories include: deposits in one name, joint deposits, deposits held in trust, and deposits in a TFSA, RRSP, RRIF, RESP, RDSP or FHSA.
• Covered: savings and chequing deposits, GICs and other term deposits, in Canadian or foreign currency. GICs with terms longer than five years are eligible too.
• Not covered: mutual funds, stocks, bonds, ETFs and cryptocurrencies.

The GIC must be issued by a CDIC member. You can check any institution on the CDIC website. Credit unions are usually protected by a provincial deposit insurer instead, so ask your credit union.

One more thing: interest you earn is usually taxable income. Inside a TFSA, it is generally tax-free. The next step explains the TFSA.

	High-interest savings	GIC
Can I take money out any time?	Yes	Only if redeemable
Is the rate fixed?	No, it can change	Yes, for the term
Good for	Emergency fund, short-term money	Money you won’t need for a set time
CDIC protection	Yes, at member institutions	Yes, if issued by a member

Example

The rates here are made up to keep the math simple. Check real rates at your bank.

A promo rate: you move $10,000 to a HISA with a 4% promo for 3 months. Interest is about $10,000 × 4% × 3 ÷ 12 = $100. After that, the regular rate is 1.5%. The next 3 months earn about $10,000 × 1.5% × 3 ÷ 12 = $37.50.

A GIC ladder: you have $5,000. You buy five GICs of $1,000 each, with terms of 1, 2, 3, 4 and 5 years.

After 1 year, the first GIC matures. At 3%, it pays $1,000 × 3% = $30 in interest, so you get $1,030. You can use it, or buy a new 5-year GIC.

If you keep doing this, one GIC matures every year. After 4 years, all five are 5-year GICs, which often pay the higher rates.

Common mistakes

• Forgetting when a promo rate ends.
• Putting your emergency fund in a non-redeemable GIC.
• Assuming every product at a bank is covered by CDIC. Stocks, funds and ETFs are not.
• Keeping much more than $100,000 in one category at one institution without checking your coverage.

✅ My checklist

☐ My emergency fund is in a high-interest savings account
☐ I wrote down when any promo rate ends
☐ I know which savings I can lock in a GIC
☐ I checked that my bank is a CDIC member (or that my credit union is insured)
☐ I know how much I have in each CDIC category

Next step → Step 14: TFSA explained: the tax-free account everyone should know

More in this topic → Banking, Budget & Saving

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There are no affiliate or referral links in this post. This is general information, not financial, tax or legal advice; everyone’s situation is different. Figures were checked in October 2026 and can change.

Sources: CDIC: Your coverage · CDIC: Guaranteed Investment Certificates (GICs) · CDIC: Strengthened deposit insurance framework