Guaranteed Investment Certificates (GICs) are a type of secured investment that offer guaranteed returns over a specified period of time. The interest rates are predetermined based on the length of investment and usually increase with the length of the term. GIC investments are insured up to $100,000 by the CDIC (Canadian Deposit Insurance Corporation), protecting you in the event of the bank’s failure. Royal Bank of Canada (RBC) offers several GIC options with term lengths starting from 30 days and a minimum investment amount starting from $500. Listed below are the different types of GICs offered by RBC.

RBC’s GICs are divided into three main categories - GICs, Interest-Linked GICs, and Market-Linked GICs. The GICs in these categories and other GICs offered by RBC are explained below.

This category includes all the different types of non-redeemable, redeemable and cashable GICs, including U.S. Dollar GICs and escalating rate GICs.

• Non-redeemable GICs:

  With a non-redeemable GIC, your investment gets locked in for the length of the term and cannot be cashed before the date of maturity. RBC’s non-redeemable GICs have some of the best interest rates offered by the bank, higher than the interest rates for redeemable and cashable GICs. RBC offers non-redeemable GICs with term lengths ranging from 30 days to 10 years. The interest rate is fixed, and the minimum investment required is $500.

  RBC’s non-redeemable GICs are available in non-registered accounts and registered accounts such as Registered Retirement Savings Plans (RRSP), Registered Education Savings Plans (RESP), and Tax-Free Savings Accounts (TFSA). You can calculate the return on such GICs before investing. Those looking to park their savings in a secure investment without requiring to access the money can consider investing in non-redeemable GICs.

• Redeemable GICs:

  As opposed to non-redeemable GICs, redeemable GICs can be cashed at any time. However, the interest rates on such GICs are lower than their non-redeemable counterparts. Another catch is that a set of predetermined early redemption interest rates apply when you redeem the GIC before maturity. These rates are usually much lower than the GIC’s interest rate. Those who are looking to invest in GICs, but have even a slight chance of having to access the funds can consider investing in redeemable GICs. RBC currently offers redeemable GICs for terms ranging from 30 days to 10 years, with the minimum investment being $500.

• Cashable GICs:

  Cashable GICs may be confused with redeemable GICs; however, they are both a bit different. As opposed to redeemable GICs that can be cashed at any time, cashable GICs have an initial waiting period (usually 30-90 days). You do not earn any interest if you withdraw within the waiting period. Unlike redeemable GICs, cashable GICs don’t have an early redemption rate. This means that after the waiting period ends, you earn interest at the offered interest rate for as long as you keep the GIC.

  RBC offers a one-year cashable GIC, for which the interest can be paid monthly, semi-annually, at maturity, or at redemption. The minimum investment amount for this GIC is $1,000.

• U.S. Dollar GICs:

  U.S. Dollar GICs are foreign currency GICs that are denominated in U.S. dollars instead of Canadian Dollars. RBC’s USD GICs are called U.S. Dollar Term Deposits. These are not redeemable prior to maturity. The term lengths available range from 30 days to five years. The minimum required investment for 30 days to five years is $5,000 USD, and for less than 30 days is $100,000 USD.

• RateAdvantage GICs:

  RateAdvantage GICs have an escalating rate format, with the interest rate increasing with every passing year. There is a cashable as well as a non-redeemable GIC offered in this category.

Interest-linked GICs are a form of variable-rate GICs. RBC offers a Prime-Linked Cashable GIC, the interest rate for which is linked to RBC’s prime rate. As the prime rate rises, the interest rate increases, and as the prime rate decreases, the interest rate goes down as well. Investing in interest-linked GICs can be beneficial when interest rates are on the rise. As these GICs are cashable, the investment can be cashed when the interest rate declines. The waiting period on RBC’s Prime-Linked Cashable GIC is 30 days.

Equity-linked GICs, also known as market-linked GICs, have a variable rate of return as the returns are linked to the performance of equity investments. There are two kinds of equity-linked GICs offered by RBC:

• GICs with a minimum guaranteed return and associated maximum return, or
• GICs with no guaranteed minimum return but unlimited return potential.

RBC currently offers six different equity-linked GIC investment options:

• RBC U.S. MarketSmart GIC - 2, 3, and 5 years terms
• RBC Canadian Banking MarketSmart GIC - 2, 3, and 5 years terms
• RBC Canadian Utilities MarketSmart GIC - 2, 3, and 5 years terms
• RBC North American MarketSmart GIC - 2, 3, and 5 years terms
• RBC Canadian Market-Linked GIC - 3 years term
• RBC ESG Market-Linked GIC - 4 and 6 years terms

Of the above, the MarketSmart GICs offer a guaranteed minimum return, while the Market-Linked GICs offer a greater return potential but are limited by a participation factor that determines the percentage at which the GIC will participate in the index’s return. The minimum investment amount is $1,000; these GICs are not redeemable until maturity.

Apart from the above-listed GIC, RBC offers some Special GIC Rates as periodic promotions. These rates are for a set term length, and the special rates change every few weeks or months.

RBC also offers an International Student GIC Program for students from certain countries seeking to expedite their student permit approval. The GIC comes under the Government of Canada Student Direct Stream (SDS).

To start investing in GICs, you should first choose the GIC that fits your needs best and then buy the GIC. You can close the GIC once it has matured to redeem your investment.

• Choose a GIC

  To start investing in RBC GICs, you should start by selecting the best GIC for you. You can check out all the GIC options available and decide based on the interest rates offered, the amount you can invest, and the term length you can invest for. You should also consider the possibility of having to cash the GIC before the completion of the term. While you can redeem redeemable and cashable GICs before the end of the term, a non-redeemable GIC can only be redeemed at maturity. Another factor to consider is the type of investment account. You can purchase a GIC in a registered account, such as a TFSA (Tax-Free Savings Account), to get tax benefits or a non-registered account.

  Your investment should also be aligned with your savings and financial goals. You must remember that GICs are a secure investment but usually offer a lower return rate than other investments, such as stocks, exchange-traded funds (ETFs), and index funds. RBC’s GIC Selector Tool can help you select the best GIC for your needs.

• Buy a GIC

  You can conveniently buy a GIC through RBC online banking if you already have a chequing or savings account with RBC. If not, you can start by setting up an account and adding funds to it. You need to meet certain requirements before you get started:

  • You must be a Canadian resident having reached the age of maturity in your province or territory of residence.
  • You must live in Canada and have a Canadian address and Social Insurance Number.
  • You should have an RBC chequing or savings account and register for online banking.
  • You should have adequate funds to make the minimum required investment.

  You can also invest in RBC GICs through RBC Direct Investing.

  If you have any doubts or concerns, you can schedule a phone call with RBC using online banking or their mobile banking app. If you aren't already a customer, you can call 1-800-769-2511.

• Close/Sell a GIC

  If your GIC is set for auto-renewal, it automatically gets renewed for the same term length at the ongoing interest rate at maturity. If you haven’t selected the auto-renewal option for your GIC, your returns get deposited in your designated RBC account when the GIC matures. You may easily change the auto-renewal settings from your online banking account.

  For cashable and redeemable GICs, you must contact RBC to cash out before maturity.