HISA vs GIC in Canada
A HISA and a GIC are both deposits that pay interest and are taxed and insured the same way. The difference is the trade you make. A HISA keeps your money accessible to withdraw or move whenever you want, and pays whatever rate the account offers at the time. A GIC commits a chosen amount for a set term at a rate fixed for that term.
Access to your money
Accessible vs locked
A HISA stays accessible: deposit or withdraw whenever you need to. A GIC commits the money until the term ends.
How the rate behaves
Current vs fixed
A HISA pays whatever rate the account offers at the time. A GIC's rate is set when you buy it and holds for the whole term.
Tax and insurance
The same
Both are interest income taxed the same way, and both are insured deposits. Access and the rate are where they differ.
The two products
What a HISA is, and what a GIC is
High-interest savings account
No term, accessible
A savings account that pays more interest than a chequing account. It has no term: you can deposit any amount at any time and withdraw when you need the money, though some accounts set a daily withdrawal limit or charge transaction fees. The rate is whatever the account pays at the time and can move while you hold it; a GIC's rate, by contrast, is fixed for its term.
Guaranteed investment certificate
Set term, fixed rate
A deposit you commit for a chosen term, from a few months to as long as ten years, at a rate fixed for that term. The principal is guaranteed back at the end. A non-redeemable GIC is locked until the term ends; a cashable or redeemable GIC can be cashed earlier, often at a lower rate. What happens when a GIC matures covers the choices at the end of the term.
Side by side
HISA and GIC, across what matters
What it is
A savings account with no term.
A deposit committed for a chosen term.
Access to your money
Deposit or withdraw any time; some accounts set a daily limit or transaction fees.
Committed until the term ends; cashable types can exit earlier, often at a lower rate.
The rate
Whatever the account pays at the time; not locked in.
Fixed when you buy it, for the whole term.
Principal
A deposit; it does not fall in value.
Guaranteed back at the end of the term.
Where you can hold it
Non-registered, or inside a TFSA, RRSP, RRIF, FHSA, or RESP.
Non-registered, or inside a TFSA, RRSP, RRIF, FHSA, or RESP.
Tax
Interest income on line 12100; fully taxable non-registered, sheltered in a registered plan.
The same: interest income on line 12100, sheltered in a registered plan.
Deposit insurance
Eligible deposit, insured within coverage limits.
Eligible deposit, insured within coverage limits.
Typically suits
Money you may need on short notice; an emergency fund.
Money with a known horizon where you want the rate settled.
Tax, where you can hold it, and deposit insurance are identical for both. Everything else in the table is where they differ.
Where each can live
Both can be non-registered or inside a registered plan
A HISA and a GIC can each sit in a regular non-registered account or inside a TFSA, RRSP, RRIF, FHSA, or RESP. A HISA inside a TFSA is often called a TFSA savings account; a GIC inside a registered plan is a registered GIC. Inside a registered plan the interest is sheltered the same way for both.
How that shelter works, and how the interest is taxed outside it, is covered on Is a GIC Taxable in Canada, which applies to HISA interest as well, since both are interest income.
How both are taxed
The tax is the same for a HISA and a GIC
Interest from a HISA and interest from a GIC are the same kind of income. In a non-registered account both are fully taxable at your marginal rate and reported on line 12100, alongside other bank-account interest. Inside a TFSA, RRSP, RRIF, FHSA, or RESP the interest is sheltered.
There is no tax advantage to choosing one over the other; the choice is about access and the rate. The year-by-year detail, including how a multi-year GIC is taxed before it pays out, is on the GIC tax page.
See it on your numbers
A locked GIC against a HISA at a rate you set
Enter an amount, a GIC rate and term, and a HISA rate. The GIC figure is what the GIC pays by contract. The HISA figure is what you would have only if the rate you enter held for the whole period, which a real HISA rate may not, since it is the account's current rate and is not locked in. Both rates are yours to set; the page quotes none.
The GIC rate is locked for the term. The HISA rate is the one you would need to hold, on average, for the whole term to match the figures on the right.
GIC, by contract
$28,122
locked at 4%
HISA, if the rate held
$27,718
at 3.5%, not guaranteed
Gap over the term
$404
in the GIC's favour at these rates
The GIC delivers its figure whatever rates do. The HISA matches its figure only if its rate averages 3.5% for the full 3 years, which is the part you cannot lock.
Estimate only. It reuses the site's GIC engine and applies the rates you enter. Tax is not included; the treatment is the same for both and is covered on the GIC tax page.
Choosing for a purpose
When a HISA fits, and when a GIC fits
Money you might need on short notice fits a HISA, where you can take it out any time without breaking anything. An emergency fund is the common example. Money with a known horizon, where you want the rate settled in advance and you will not need it before then, fits a GIC.
Many people hold both: a HISA for the cash they may need, a GIC or a few GICs for amounts they can set aside. The better product depends on what the money is for. Access points to a HISA, a settled rate points to a GIC, and a credit union often pays competitively on both.
Common questions
HISA vs GIC, answered
Match the account to the money
A HISA and a GIC are taxed and insured the same way, so the choice comes down to access and the rate. Compare current credit union HISA and GIC rates, then run the numbers before you decide.