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The list of the best GIC rates is created by surveying the best wholesale GIC rates offered at major Canadian brokerages (RBC, CIBC, TD, BNS, BMO). The GICs quoted on my GIC Rate Sheet can be obtained from either a full service broker or by using a discount brokerage account.
The highest rates on GICs for 1 year is 2.72% and for 5 years is 3.45%, which means the yield curve is pretty flat (not much extra interest can be earned by tying up your money for a few years). Its also worth noting that the rate on 1 year GICs has risen a bit over the past year along with interest rates in general.
It’s worth noting that higher GIC rates can be obtained in some cases by holding an account directly with the issuer. This is true for most GIC offered by mortgage banks such as Home Trust (Oaken Financial), Equitable Trust, etc. Investors will generally find that they can obtain about 0.25% better rate by going directly to the issuer, this is because the broker offering third party GICs for sale (i.e. when RBC offers Canadian Tire Bank GICs) the broker receives a 0.25% commission. At least part of this commission is absent when you buy a GIC directly from the issuer. This fact isn’t universal, but its worth keeping in mind. Each investor will need to decide what trade-off they are willing to accept between admin the burden of holding multiple GIC accounts, and the lower/higher rate.
Its also worth noting that if you’re focused on only holding GICs from major banks (RBC, TD, BMO, CIBC, BNS), you will usually find the rate you can obtain from inside your brokerage account will be better than the rate you can obtain from the retail branch of the same institution. For example, RBC offers wholesale GICs through brokers at 2.61% for 1 year, but retail depositors at the bank branch, can’t even earn 2% at a branch. The bottom line is serious Canadian investors should usually purchase GICs through a broker rather than a branch banker.