“What is GIC” in Canada?: Gradding.com

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All About Guaranteed Investment Certificates in Canada

As a student studying in Canada, you might have heard about GIC, but do you know what is GIC? Well, look no further, Gradding is right here to help you.

Table of Contents

Any student who lives in Canada and looking for solid financial support, choosing GIC i.e guaranteed investment certificates is a good option. They are considered low-risk investments especially for students. They are chosen by international students who aim to study in Canada under the SDS program. One of the most significant benefits of GICs is their low-risk and predictable returns it offer. Students living in Canada can consider this if they really want some reliable investment option.

Moving to Canada can be an exciting yet challenging experience. It's essential to have a solid financial plan in place, regardless of whether you're staying for a short while or a long period. The good news is that Canada offers a plethora of financial products to help you achieve your financial goals and keep your money secure. One such product is Guaranteed Investment Certificates (GIC’s), which offer a range of savings accounts and investment opportunities to fit every budget and lifestyle. So, are you ready to take advantage of the world of GICs and start planning your financial future in Canada?

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What Is GIC in Canada?

Are you tired of keeping your money in a boring savings account? Well, have you heard of GIC? It's the perfect low-risk investment option that guarantees your principal amount and offers high interest rates. GIC, or Guaranteed Investment Certificate, is a short-term investment scheme offered by trusted financial institutions in Canada. 

But what makes GIC’s so special? The investment has a fixed or variable interest rate proportional to your chosen duration. This means that the longer you select, the higher the interest rate. Plus, GIC’s are perfect for international students who plan to study in Canada under the SDS program. Not only does it serve as proof of enough funds to cover the entire cost of living, but it is also a mandatory and specific requirement when it comes to GIC. 

And if you're worried about losing your money, don't be! Financial institutions guarantee your principal amount, and in case of any failure, the deposits are usually insured up to CAD 100,000. While non-redeemable GIC’s lock your money for a predetermined period, it also means you can earn higher returns on your investment. And if you change your mind, redeemable GICs allow you to cash out your principal before maturity. 

So why settle for a regular savings account when you can open a GIC? Enjoy a low-risk investment with peace of mind, stable interest rates, and high returns on your investment. So, don't miss out on this incredible opportunity to meet your financial requirements and grow your money!

Why Should International Students Take GIC?

Investors can benefit significantly from Guaranteed Investment Certificates (GICs), as they offer a range of advantages. Let’s check out some:-

1. “Little-Little Risk Hai Boss”:- One of the most significant benefits of GICs is the trust of low-risk and profitable returns. We can say that investors receive fixed amount of interest on specific time ignoring any fluctuations in the interest rates during the period of investment.

2. “Paisa Bhi Suraksha Bhi”:- Another advantage of GICs is that investors can “grab a cup pf coffee” knowing that their investment that they have done initially is insured by the Canada Deposit Insurance Corporation (CIDC) or a provincial insurance company which is up to CAD 100,000. thus, it ensures that investment made is secure and shielded.

3. “Sapno Ki Chabii :- Do you want to get your “sapno ki chabii ”?. GICs are a great option for those who have short- or mid-term financial goals. They are an perfect way to save for crucial and important milestones of life. This can include down payment for a home, child's education, rainy day funds, or the retirement planning and so on.

Overall, investing in GICs can be a powerful decision that can offer several benefits at the same time. From low-risk predictable returns to insured principal amounts, it has the ability to save for the vital financial goals of life. It's no wonder that why GICs is such a popular investment option among Canadians.

Types of GICs

When it comes to eye catching investment option, GIC is a top choice for students. They allow students to choose from several options that include product features, investment terms, interest payment frequencies, and access to funds. Just like we explore different options whenever we buy anything, it’s important to dive into the types of GIC’S. Here are some basic types of GICs to be familiar with. 

1. Guaranteed-Return GICs

As the name suggests Guaranteed-return GIC is an investment option that guarantees the interest rate and principal amount, so you don't have to worry about market or economic changes that generally affects the investment. Moreover, this GIC allow you to invest in Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), Registered Disability Savings Plan (RDSP), retirement plans such as Registered Retirement Income Fund (RRIF) or Life Income Fund (LIF), or foreign currency in order to create flexibility to the students.

2. Interest Rate-Linked GICs

We all know that generally investment are impacted due to different scenario. Interest Rate-Linked GIC offers a variable interest rate that are linked to changes in the prime rate. But the best part is after maturity, your principal amount is guaranteed in return. Moreover when the prime rate is increased your investment is leveled up with the higher earns whereas if the prime rate s decreased, you have a chance to cash out your investment and reinvest in another financial product of your choice. Thus, this feasibility in GIC is the reason of popularity among people.

3. Market-Linked GICs

If you are a person who is into the stock market, this GIC is best suited for you. Market-linked GIC involved stock market (such as the S&P 500 Index) or equity benchmarks. This GIC guarantees your initial investment and provide little to minimum interest rate on it. The most fascinating thing about this GIC is that sometimes the returns are so unpredictable and can also beat the inflation. The GIC's performance is tied to another benchmark for a particular period of time.

Thus, choosing any GIC lies upon you and Gradding suggests that if you feel stressed about choosing GIC speaking with the investment advisor is important as it helps you to understand the right option for you. Furthermore, with the help of advisor you can be better prepared about the pros and cons of each GIC that will help you to be prepared for financial goals in Canada. Now that you are well aware about GIC, don’t you want to know that how you can open a GIC account. Let's get into the steps of opening it. 

What Are the Steps to Open a GIC Account in Canada?

By the above discussion you probably would have an idea of what kind of GIC you must choose. But it’s very important to know that how you can? Let’s understand about the process of getting a GIC in Canada comprise of the following steps – 

Step 1: Research 

Researching is very crucial. You must research different financial institutions in Canada that offer GICs for international students. There are several participating institutions, including banks, credit unions, or other financial organizations approved by the Canadian Government. You must take an idea about the details of the GIC programs offered by the financial institutions. 

Step 2: Apply

Gather the required documentation, including passport or identification, letter of acceptance from a designated learning institution (DLI) in Canada, or any other documents as required. Fill out the application form for the GIC program provided by the financial institution carefully. After that, submit the application form and the documents to the financial institution. 

Step 3: Funding

Transfer at least $10,000 CAD plus the transaction fees (if any) for the GIC into the account provided by the financial institution. You can use your personal or joint account for this. Upon successful application and funding, the financial institution will issue a confirmation or certificate for the GIC.

Step 4: Apply for a Canadian Study Permit

Use the GIC documentation and other required documents to apply for a study permit or Visa. You can visit your home country's nearest Canadian embassy or visa application center.

Step 5: Travel to Canada and Activate GIC

Once you arrive in Canada, you need to activate and access the GIC funds by visiting any of the bank branches with which you have opened your GIC account. For this, you have to complete all the formalities and submit the required documents. 

Once it is done, every month, 1/12th of the remaining funds of your GIC's principal (added applicable interest) will be transferred to your designated personal deposit account. After a year, the total amount of your GIC and appropriate interest will be deposited into your personal deposit account.

If your study permit/visa application is not approved, a refund of $10000 will be added to your source account. 


Banks That Offer GIC in Canada for International Students

Now, when you have learned about what is GIC in Canada and the steps to get it let us know about the banks that offer it. There are some financial institutions that the Canadian Government authorizes to provide GIC. These institutions must fulfill all criteria for the Student Direct Stream. Here are the names of some of the central banks and financial organizations –

  • BMO (Bank of Montreal)
  • CIBC (Canadian Imperial Bank of Commerce)
  • Desjardins Group
  • HSBC Bank Canada
  • ICICI Bank Canada
  • National Bank of Canada
  • SBI Canada Bank
  • Scotia bank

Let us look at the three most popular banks that allow candidates to open a GIC Canada account.

Bank Name ICICI Bank, Canada Scotiabank, Canada SBI, Canada
Mode of Registration Online Online Online
GIC plus Processing Fee $10,150 CAD (INR 6.04 lacs)  $10,200 CAD (INR 6.07 lacs) $10,150 CAD (INR 6.04 lacs) $10,100 CAD (SBI India) (INR 6.01 lacs)
Confirmation Document Needed Investment Balance Confirmation Investment Directions Confirmation Investment Declaration Advice
Mode of Transferring GIC Amount Wire Transfer Wire Transfer Wire Transfer
GIC Refund Processing Fee $10 CAD (INR 595) Disclosed at the time refund $25 CAD (INR 1489)
Redeem Period of GIC 12 Months Minimum 12 Months (Can be extended) 12th Months
Monthly Interest on GIC Amount 1.0 %( p.a.) Depends on the chosen program 1.15%

The choice between cashable and non-redeemable GICs entirely depends on your monetary goals, risk appetite, and liquidity needs. You can choose any of them as per your needs and requirements.


Bank Registration Criteria for Obtaining GIC

Well, who likes to get rejected, right? So don't let your application be rejected due to non-compliance. Make sure that your bank satisfies the following criteria: 

  1. The bank must provide you with a confirmation of your GIC purchase, such as a letter of attestation, a GIC certificate, an Investment Directions Confirmation, or an Investment Balance Confirmation.
  2. The GIC must be held in an investment account or a student account that you can only access once you arrive in Canada. The bank should release the funds only in the following manner:

- An initial lump sum upon arrival in Canada 

- The remaining funds should be released in monthly or bi-monthly installments over a period of 10 to 12 months. 

It is important to remember that your GIC is a crucial document for your student visa/permit application. So, ensure that your bank meets the criteria mentioned above to avoid any delays or rejections!

Planning for GIC? : Putting It All Together 

As an international student applying for the SPP visa category in Canada, you must invest CAD 10,000 in a Guaranteed Investment Certificate (GIC) with a Canadian bank. Doing so guarantees the Canadian Government that you have enough funds to manage your accommodation for at least a year in Canada. Not only that but opening a GIC account also expedites the visa application process. 

But that's not all. GICs are available in Canadian Dollars (CAD) and U.S. dollars (USD). For the first 12 months, you'll receive a portion of the deposited amount every month. There are two types of GICs: cashable/redeemable and non-redeemable. With a cashable or redeemable GIC, you can withdraw your money without any fees. However, with a non-redeemable GIC, you can only withdraw your money without incurring a cost.

At the end of the term, the total deposited amount and interest on the investment will be credited to you. And don't worry; your money is secured under the Canada Deposit Insurance Company (CDIC).

So why wait? Invest in a GIC with a Canadian bank today and secure your future as an international student in Canada!

Bottom Line

Are you looking for a safe and secure investment option that guarantees returns and is easily accessible? Look only as far as a Guaranteed Investment Certificate (GIC). With a GIC, not only can you save money while studying in Canada, but you can also fulfill the financial requirements of your student visa application. However, don't just invest blindly - it's crucial to review the terms and conditions of the GIC and compare the rates of return offered by different banks. Make an intelligent investment decision today by choosing a GIC!

At Gradding, we understand the challenges and complexities of studying abroad as an international student. Our experts are well-equipped and provide end-to-end assistance with all your immigration needs.

FAQs

Q1. What is GIC in Canada?

A Guaranteed Investment Certificate (GIC) is a short-term secure savings investment plan Canadian financial institutions offer. The purpose of the GIC requirement for international students is to ensure they have enough funds to cover expenses for living and tuition fees for the first year of their studies in Canada.

2. How does a GIC work?

The students deposit a specific amount into a GIC for a predetermined term, usually one year. The investment accrues interest during this period, and you will receive the principal amount.

3. How is the interest on a GIC calculated?

Interest can be compounded annually, semi-annually, or monthly, depending on the GIC terms. It is typically calculated based on the principal amount and the stated interest rate.

4. Are GICs safe investments?

Yes, GICs are considered low-risk investments in Canada. The principal amount is guaranteed, making it a secure option for investors.

5. Is the interest earned on a GIC taxable?

Yes, the interest earned on a GIC is considered taxable income. It is essential to report the claim when filing your taxes in Canada.

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