Instead of issuing the customer a loan, the customer grants the loan to the financial institution. How do GICs work?Ī GIC works opposite to the typical lending relationship between financial institutions and their clients. GICs purchased through credit unions, on the other hand, are provincially insured and the total deposit amount insured will differ depending on the insurance organization. For example, if you are buying a GIC from one of the big banks, your deposit will be insured up to $100,000 by the CDIC.
When you purchase a GIC, your funds are insured with CDIC or a provincial insurance organization depending on the financial institution you purchased the GIC from. GICs are a popular method of investing among Canadians for their guaranteed interest.
With a GIC, you invest your money with a financial institution (the “issuer”) for a specific period of time (the “term”), and they'll guarantee you a return of the principal (the initial amount you invested) and interest at a rate specified in your contract.
Guaranteed investment certificates (GICs) are financial products that allow Canadians to invest their money and earn some guaranteed interest.
