Saving & retirement · guide
GIC vs HISA in 2026: how it works, with a worked example
Compares what a GIC and a high-interest savings account leave you with after tax over the months you choose, including promo rates that expire, cashable versus locked-in terms, and how much you give up by leaving cash in chequing. The headline is the dollar difference and the date your money is locked until.
How this calculator works
Both accounts start with the same deposit. The GIC compounds once a year at its rate; the savings account compounds monthly at its rate. In a taxable account the interest earned each year is taxed at your marginal rate and the tax is paid from the account, which is what actually happens when you pay your tax bill. In a TFSA or RRSP no tax is taken.
The break-even savings rate is the HISA rate that would end the term with exactly the GIC’s after-tax value.
Worked example: $25,000 for 2 years, 4% GIC vs 3.25% HISA, Ontario at $80,000 income
| Line | GIC | HISA |
|---|---|---|
| Interest earned | $2,028.14 | $1,668.57 |
| Tax at 29.65% | − $601.34 | − $494.73 |
| After tax | $26,426.80 | $26,173.84 |
| HISA rate needed to match | 3.93% |
Assumptions
- The HISA rate stays constant for the whole term; in practice it moves with the Bank of Canada rate.
- Tax is paid each year from the account; interest is fully taxable at the marginal rate the calculator derives from your income and province.
- No early redemption of the GIC.
Questions people ask
- Is a GIC or a high-interest savings account better?
- A GIC pays a fixed, usually higher rate but locks the money for the term; a HISA pays a variable rate and stays accessible. If you will not need the money before the term ends and the GIC rate is above the HISA rate by more than the compounding difference, the GIC earns more. The calculator shows the exact gap after tax.
- How is GIC interest taxed?
- As ordinary income at your full marginal rate, every year it accrues, even on a compound GIC that pays at maturity (the CRA requires annual accrual reporting for GICs longer than a year). In a TFSA it is tax-free; in an RRSP it is deferred.
- Are GICs and savings accounts insured?
- Yes, at CDIC member institutions, up to $100,000 per depositor per insured category (for example non-registered, TFSA and RRSP are separate categories). Credit unions are covered by provincial insurers, some with unlimited coverage.
- What is a cashable GIC?
- A GIC you can redeem early, usually after 30 to 90 days, at a lower rate than a non-redeemable GIC. It sits between a HISA and a locked-in GIC in both flexibility and yield.
- Does a GIC compound?
- Compound GICs reinvest interest annually; simple-interest GICs pay it out. Most HISAs calculate interest daily and pay monthly, which is why a HISA at the same headline rate earns slightly more than an annual-compound GIC.
- Should I hold interest in my TFSA?
- If you hold both interest-bearing and equity investments, the tax saving from sheltering is highest for the asset taxed hardest per dollar of return, which is interest. Many people therefore hold GICs and HISAs in the TFSA and equities outside, though equities have more growth to shelter over long periods.
- Is a GIC worth locking my money up for?
- Only if the extra interest after tax matters to you more than access. The headline shows the dollar difference over your term; if it is small, the savings account's flexibility usually wins. A cashable GIC splits the difference at a lower rate.
- How are HISA promo rates counted?
- A promo rate applies for a few months and then drops to the regular rate. The calculator blends both into an effective rate for your term, which is often well below the advertised number: 5% for 3 months then 2.5% is about 3.1% over a year.
- Is GIC interest taxed every year even if it is paid at maturity?
- Yes. On a GIC longer than a year the CRA taxes the interest accrued each year on its anniversary, even if it is compounding and you do not receive it until maturity. Inside a TFSA or RRSP there is no tax either way.
- Are GICs and HISAs insured?
- At CDIC member banks, deposits and GICs of up to five years are covered to $100,000 per category per institution. Credit unions have separate provincial coverage, in some provinces unlimited. Check the institution before you deposit more than $100,000.
Sources
Every figure on this page comes from one of these primary sources. Data last verified .